I 


i     C-P\A< 


THE  ABOLITION  OF 
POVERTY 

BY 

JACOB   H.   HOLLANDER,   Ph.D. 

Professor  of  Political  Economy  in  the 
Johns  Hopkins  University 


BOSTON    NEW  YORK    CHICAGO 

HOUGHTON  MIFFLIN   COMPANY 

(Elbe  l!^iberjiibe  "^xzH  Cambrilise 


COPYRIGHT,   1914,  BY  JACOB  H.   HOLLANDER 
ALL  RIGHTS  RSSSRVKD 

Published  October  IQ14 

LOAN  STACK 


t    ?3%ol^ 


CAMBRIDGE  .  MASSACHUSBTTS 
U   .  S  .  A 


H7 


PREFACE 

The  purpose  of  this  little  essay  is  to  set  forth 
the  Heedlessness  of  poverty.  Like  preventable 
disease,  economic  want  persists  as  a  social  ill 
only  because  men  do  not  desire  sufficiently  that 
it  shall  cease.  There  is  still  much  mumbling  of 
old  commonplaces,  and  it  has  seemed  worth 
while  to  emphasize  anew  this  definite  corollary 
of  modern  political  economy,  that  the  essential 
causes  of  poverty  are  determinable  and  its  con- 
siderable presence  unnecessary. 


CONTENTS 

I.  The  Nature  of  Poverty         .       .       .      i 
II.  The  Social  Surplus      .       .       .       .        i8 

III.  The  Distribution  of  Income  .       .       .34 

IV.  The  Rate  of  Wages     .        .       .       .       46 
V.  The  Underpaid 65 

VI.  The  Unemployed 79 

VII.  The  Unemployable 93 

VIII.  Conclusion 106 

Notes. ii5 


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THE  ABOLITION   OF 
POVERTY 

CHAPTER   I 

THE  NATURE  OF  POVERTY 

Social  unrest  is  the  keynote  of  twentieth- 
century  life.  The  disquiet  shows  itself  in  unmis- 
takable ways:  the  ferment  of  industrial  classes, 
the  realignment  of  political  parties,  the  sensitive- 
ness of  public  opinion,  the  intentness  of  economic 
inquiry.  Such  malaise  is  neither  local  nor  tran- 
sient. Every  modern  state  exhibits  its  presence ; 
each  month  discloses  its  greater  intensity.  For 
this  impressive  phenomenon  a  single  cause  is  ac- 
countable. Specific  conditions  of  time  and  place 
affect  the  degree  of  unrest,  and  influence  the 
mode  of  expression.  But  the  primary  force  is 
everywhere  the  same  —  the  presence  and  sting 
of  poverty.  This  is  the  heart  and  center  of  social 
disturbance. 

Clear  thinking,  here  as  so  often  in  social  dis- 
cussion, is  impeded  by  the  vagueness  of  terms. 
The  word  "poverty  "  is,  in  ordinary  usage,  applied 


2      THE  ABOLITION  OF  POVERTY 

indifferently  to  three  distinct  conditions :  (a)  eco- 
nomic inequality,  (b)  economic  dependence,  and 
(c)  economic  insufficiency.  A  man  is  said  to  be 
poor  in  mere  contrast  to  his  neighbor  who  is  rich ; 
this  is  economic  inequality.  Almshouses  and  pub- 
lic relief  minister  to  those  who  in  the  eye  of  the 
state  are  poor;  this  is  economic  dependence. 
Midway  between  the  modestly  circumstanced  and 
the  outright  dependent  are  the  poor  in  the  sense 
of  the  inadequately  fed,  clad,  and  sheltered ;  this 
is  economic  insufficiency. 

More  precise  terminology  is  possible.  The  con- 
dition of  those  who  are  in  chronic  need  of  public 
aid  or  private  relief  to  maintain  physical  existence 
is  described  more  accurately  as  pauperism.  It  is 
so  obviously  misleading  to  use  "poverty"  as  a 
mere  correlative  of  riches  that  everyday  speech 
in  this  connection  ordinarily  replaces  the  sub- 
stantive by  some  indirection,  as  the  "poorer 
classes."  Eliminating  pauperism  and  modest 
circumstance,  the  terms  "poor"  and  "poverty" 
remain  to  be  properly  applied  to  those  who  com- 
monly lack  some  considerable  part  of  the  eco- 
nomic goods  and  services  necessary  for  decent 
and  wholesome  life. 

The  problems  of  pauperism  and  of  economic 
inequality  are  definite  and  familiar.  Their  mod- 
ern phase  is,  indeed,  notable  less  for  new  extent 
or  greater  difficulty  than  for  changed  social  atti- 


THE  NATURE  OF  POVERTY         3 

tude.  As  to  economic  inequality,  the  world  is  not 
greatly  concerned  that  certain  of  its  citizens  are 
much  better  supplied  than  others  and  that  these 
in  turn  are  more  adequately  provided  than  many, 
—  so  long  as  the  least  favorably  circumstanced 
have  enough  for  a  well-ordered  life.  The  anti- 
social methods  whereby  great  fortunes  are  often 
amassed  and  preserved,  —  illegal  privilege,  preda- 
tory acquisition,  exploitative  use,  —  rather  than 
the  fortunes  themselves,  excite  popular  resent- 
ment. This  irritation  is  aggravated  by  glaring 
examples  of  wasteful  dissipation  or  vicious  con- 
sumption of  great  possessions.  Riches,  as  such, 
thus  become  the  target  for  attacks  really  justified 
by  ill-gotten  or  ill-used  riches.  Against  that 
wealth  which  represents  individual  superiority  — 
"skill,  dexterity,  and  judgment"  in  the  phrases 
of  an  old  writer  ^  —  there  is  no  social  protest,  any 
more  than  there  is  concern  for  the  mere  distance 
by  which  the  well-fed  hindmost  is  surpassed  in 
the  economic  contest. 

Pauperism  —  the  pathological  disorder  of  the 
social  body  —  presents  obvious  and  long-stand- 
ing evils.  In  every  community  neglected  disease, 
infirmity,  widowhood  and  orphanhood,  feeble- 
mindedness, insanity,  physical  or  mental  degen- 
eracy, delinquency,  criminality  have  economic 
counterpart  in  complete  or  partial  dependence. 
But   these   misery-attended   wastes   are   being 


4      THE  ABOLITION  OF  POVERTY 

treated  with  an  intense  energy  that  compares 
with  the  finest  effort  in  the  parallel  field  of  medi- 
cal endeavor.  There  is  a  pitiful  smallness  in  what 
has  been  done,  measured  by  the  immensity  of 
what  remains ;  but  the  vista  is  neither  boundless 
nor  hopeless.  An  aroused  social  consciousness  is 
extending  effort  from  positive  care  to  preventive 
foresight,  and  placing  limit  to  the  increase  of 
pauperism  as  social  disease.  In  the  interim, 
twentieth-century  humanitarianism,  finding  ex- 
pression in  greater  public  undertakings  and  in 
more  wisely  directed  private  energies,  seeks  to 
meet  existing  dependence  in  a  new  spirit  of  com- 
munal responsibility  and  social  conservation. 

It  is  poverty  in  the  sense  of  economic  insuffi- 
ciency —  its  wide  extent,  its  assumed  necessity, 
its  tragic  consequence  —  that  forms  the  real 
problem.  There  are  great  bodies  of  people  in 
country  and  in  city  who  from  birth  have  less  than 
enough  food,  clothing,  and  shelter;  who  from 
childhood  must  toil  long  and  hard  to  secure  even 
that  insufficient  amount;  who  can  benefit  little 
from  the  world's  advance  in  material  comfort  and 
in  spiritual  beauty  because  their  bodies  are 
under-nourished,  their  minds  over-strained  and 
their  souls  deadened  by  bitter  struggle  with 
want.  These  are  the  real  poor  of  every  commun- 
ity —  the  masses  who,  not  lacking  in  industry 
and  thrift,  are  yet  never  really  able  to  earn 


THE  NATURE  OF  POVERTY         5 

enough  for  decent  existence  and  who  toil  on  in 
constant  fear  that  bare  necessities  may  fail.^ 

Neither  racial  qualities  nor  national  character- 
istics account  for  the  presence  of  such  poverty. 
It  persists  as  an  accompaniment  of  modern  eco- 
nomic life,  in  widely  removed  countries  among 
ethnically  different  peoples.  It  cannot  be  identi- 
fied with  alien  elements  in  native  race  stocks. 
Countries  which  have  for  generations  been  rela- 
tively free  from  foreign  influx  and  have  devel- 
oped industrialism  from  within  exhibit  the  same 
phenomenon  of  economic  want.  Wholesale  im- 
migration is  likely  to  be  attended  by  urban  con- 
gestion and  industrial  exploitation,  but  these  are 
supplementary  phases  of  the  problem  of  poverty. 
Even  in  the  United  States,  where  immigration 
has  attained  proportions  unexampled  in  the 
world's  history,  there  is  no  reason  to  believe  that 
such  influx  —  bearing  in  mind  the  part  it  has 
played  in  creating  and  enlarging  industrial  op- 
portunity—  has  permanently  affected  the  con- 
dition of  poverty. 

Appalling  in  its  own  misery,  this  mass  of  pov- 
erty takes  on  even  greater  significance  as  the  sup- 
ply source  of  pauperism.  Not  only  is  the  interval 
between  insufficiency  and  dependence  at  all  times 
narrow,  but  the  inability  to  provide  against  mis- 
hap or  "Calamity,  indeed,  the  very  conditions  of 
body  and  mind  which  grow  out  of  under-nourish- 


6      THE  ABOLITION  OF  POVERTY 

ment  and  overcrowding  make  fatally  easy  the 
transition  from  self-support  to  dependence.  Pov- 
erty has  thus  been  likened  to  a  treacherous  foot- 
path encircling  the  hopeless  morass  of  pauperism. 
Those  who  tread  it  are  in  constant  danger,  even 
with  the  exercise  of  care  and  foresight,  of  falling 
or  of  slipping  or  of  being  crowded  off.  This  inse- 
cure foothold,  once  lost,  is  not  likely  again  to  be 
regained;  the  fallen  are  added  to  the  wretched 
body  of  chronically  dependent. 

The  probable  amount  of  such  poverty  is  as  im- 
pressive as  its  evident  quality.  In  the  unfortun- 
ate absence  of  any  direct  enumeration,  recourse 
must  be  had  to  reasonable  computation.  The 
remarkable  study  of  the  nature  and  extent  of 
poverty  in  the  United  States,  made  by  Robert 
Hunter  ten  years  ago,  and  still  the  only  service- 
able survey  of  the  subject,  set  forth  that,  in  the 
industrial  commonwealths  of  the  United  States, 
probably  as  much  as  20  per  cent  of  the  total 
population  are  ordinarily  below  the  poverty  line. 
If  one  half  of  this  estimate  be  applied  to  the  other 
commonwealths,  the  conclusion  is  that  in  fairly 
prosperous  years  "no  less  than  10,000,000  per- 
sons in  the  United  States  are  in  poverty."  In  this 
computation  a  purely  physical  standard  —  "a 
sanitary  dwelling  and  sufficient  food  and  cloth- 
ing to  keep  the  body  in  working  order  "  —  define 
the  poverty  line,  with  no  monetary  allowance  for 


THE  NATURE  OF  POVERTY         7 

intellectual,  aesthetic,  moral,  or  social  require- 
ments.^ 

Hunter's  estimate  seemed  at  the  time  incred- 
ible, even  though  the  aggregate  included  4,000,- 
000  persons  dependent  upon  some  form  of  public 
relief;  but  the  computation  was  in  harmony  with 
the  investigations  of  Booth  in  East  London  and 
with  the  inquiry  of  Rowntree  in  York.  It  has  not 
only  since  maintained  itself  against  any  serious 
challenge,  but  it  has  found  confirmation  in  other 
accredited  studies  of  living  conditions  in  this 
country  and  abroad. 

One  of  the  most  recent,  as  well  as  most  instruc- 
tive, of  such  investigations  was  made  in  the  au- 
tumn of  19 1 2  into  the  general  economic  condi- 
tions of  the  working-class  of  Reading,  England, 
by  the  statistical  method  of  sampling.*  Accepting 
a  carefully  determined  minimum  standard  for 
food,  clothing,  and  other  purchases  barely  suffi- 
cient to  keep  workers  efficient  and  dependents 
nourished,  it  was  found  that  from  25  to  30  per 
cent  of  the  working-class  population  of  Reading 
were,  in  191 2,  so  far  as  they  were  dependent  upon 
earnings,  pensions,  or  possessions,  below  this  min- 
imum standard.  Further,  it  appeared  that  more 
than  half  of  the  working-class  children  of  Read- 
ing, during  feome  part  of  their  first  fourteen  years, 
lived  in  households  where  the  standard  of  life  in 
question  was  not  attained.   Not  all  the  towns  of 


8       THE  ABOLITION  OF  POVERTY 

the  United  Kingdom  would  afford  so  depressing 
an  exhibit.  But  making  all  reasonable  allow- 
ance, Mr.  Bowley  reached  the  conclusions  that 
somewhat  over  13  per  cent  of  the  industrial 
working-class  population  of  Great  Britain  are 
below  the  standard  at  any  one  time,  as  compared 
with  15.5  per  cent  in  York  and  25  to  30  per  cent 
in  Reading ;  that  a  very  much  larger  proportion 
of  families  pass  below  the  standard  at  one  time  or 
another,  and  that  the  proportion  of  children  af- 
fected is  much  greater  than  the  proportion  of 
adults. 

The  available  evidence  as  to  the  distribution  of 
incomes,  as  compared  with  the  cost  of  living,  in 
the  United  States,  gives  similar  results.  The 
analyses  of  Mr.  F.  H.  Streightoff  ^  show  that  in 
1904,  and  probably  at  the  present  time,  some- 
thing over  60  per  cent  of  the  males  sixteen  years 
of  age  and  over,  employed  in  manufacturing, 
mining,  trade,  transportation,  and  other  indus- 
trial occupations  were  earning  less  than  $626  per 
annum;  about  30  per  cent  were  receiving  from 
$626  to  $1044 ;  but  that  only  10  per  cent  had  in- 
comes of  at  least  $1000.  If  those  employed  in 
agricultural  pursuits  be  included,  the  figures 
change  to  65  per  cent  in  the  less  than  $626  group, 
27  per  cent  in  the  $626  to  $1044  group,  and  8  per 
cent  in  the  more  than  $1000  group.  Upon  the 
highly  improbable  assumption  that  all  men  en- 


THE  NATURE  OF  POVERTY        9 

gaged  in  gainful  occupations,  but  not  included  in 
the  above,  were  in  1904  receiving  $12  per  week  or 
more,  it  would  appear  that  fully  one  half  of  the 
adult  males  engaged  in  gainful  occupations  in  the 
United  States  are  earning  less  than  $626  per 
year. 

Such  evidence  as  is  available  as  to  the  cost  of 
maintaining  a  decent  standard  of  living  in  the 
United  States  indicates  that  —  measured  by 
minimum  requirements  of  food,  clothing,  shelter, 
and  miscellaneous  expenditure  for  an  average 
family  of  father,  mother,  and  three  children  un- 
der fourteen  years  of  age  —  an  annual  income  of 
$600  to  $700  is  insufficient;  that  $700  to  $800  re- 
quires exceptional  management  and  escape  from 
extraordinary  disbursements  consequent  upon  ill- 
ness or  death ;  and  that  $825  permits  the  mainten- 
ance of  a  fairly  proper  standard.^  It  is  likely  that 
this  does  not  even  attain  what  has  been  consid- 
ered "a  living  wage  in  America";  that  is  to  say 
"the  minimum  upon  which  an  ordinary  Ameri- 
can household  may  be  maintained  ...  so 
as  to  provide  not  only  for  physical  necessities, 
but  for  the  education  of  the  children,  and  for 
a  fair  degree  of  comfort,  a  fair  share  in  the  re- 
creations, church  support,  and  other  activities 
of  the  community,  provision  through  insurance 
for  death,  injury,  and  sickness,  and  a  compe- 
tence for  old  age."  ' 


10    THE  ABOLITION  OF  POVERTY 

t  Specifically,  it  appears  that  of  families  with 
incomes  between  $700  and  $8cx),  30  per  cent  are 
underfed,  52  per  cent  are  underclothed,  58  per 
cent  are  overcrowded,  14  per  cent  are  both  under- 
fed and  underclothed,  19  percent  are  both  un- 
derfed and  overcrowded,  and  35  per  cent  are  both 
underclothed  and  overcrowded.^  These  data  were 
collected  in  1907  and  are  applicable  primarily 
to  industrial  cities  of  size  in  the  United  States. 
But  their  wider  use  is  warranted  by  the  fact  that 
relative  prices  in  the  United  States,  weighted 
according  to  the  average  consumption  of  food 
in  workingmen*s  families,  have  increased  from 
125.9  in  1907  to  163.4  ^^  I9i3»  or  29.7  per  cent.® 
The  only  statistical  materials  available  as  to 
the  increase  in  wages  are  the  union  scales  of 
wages  and  hours  of  labor  prevailing  on  May  15 
each  year  from  1907  to  191 3  in  the  principal 
mechanical  trades  in  forty  important  industrial 
cities  in  the  United  States,  as  collected  by  the 
United  States  Bureau  of  Labor  Statistics.  The 
increases  in  wages  from  1907  to  191 3  have  been 
materially  less  than  the  increase  in  retail  food 
prices,  being  in  the  case  of  representative  well- 
organized  trades  as  follows:  bricklayers,  5  per 
cent;  granite-cutters,  7.3  per  cent;  machinists, 
8.3  per  cent;  linotype  operators,  9.6  per  cent.^^ 
It  seems  reasonable  to  assert  that  $800  is  a 
minimum    family   expenditure    upon    anything 


THE  NATURE  OF  POVERTY       1 1 

less  than  which  "the  task  of  making  both  ends 
meet  is  too  severe  to  be  successfully  accom- 
plished in  ordinary  circumstances,  without  a 
lowering  of  the  standard  of  living  below  the  nor- 
mal demands  of  health,  working  efficiency,  and 
social  decency."  ^^ 

In  actual  experience  the  wide  gap  between 
adult  male  earnings  and  necessary  family  ex- 
penditure drives  a  large  part  of  such  families 
to  eke  out  the  earnings  of  the  father  by  sending 
the  mother  and  children  out  to  work.  Of  the 
group  of  families  in  New  York  City  that  spend 
from  $800  to  $1 100,  studied  by  Professor  Chapin, 
three  fifths  were  dependent  in  some  degree  upon 
the  earnings  of  wife  and  children  and  upon  in- 
come from  lodgers.  ^2  Not  only  is  such  supple- 
mentary income  transient  and  insecure,  but  it 
is  obtained  at  a  social  cost  not  less  heavy  than 
that  which  underfeeding,  underclothing,  and 
overcrowding  involve.  In  seeking  to  make  eco- 
nomically possible  a  normal  family  life,  it  destroys 
the  very  possibility  thereof. 

The  social  implications  of  such  conditions  are 
unmistakable.  They  mean  that  a  great  mass 
of  those  whom  we  are  accustomed  to  regard  as 
the  earth's  most  highly  civilized  people  are 
habitually  under-supplied  with  the  things,  physi- 
cal and  spiritual,  which  the  human  structure 
requires,   and   that   this   inadequate   provision 


12    THE  ABOLITION  OF  POVERTY 

involves  not  only  bitter  struggle  but  imperfect 
existence,  destined  if  unchecked  to  result  in 
under-vitalized  and  degenerate  stock,  like  the 
dwarfed  growths  of  bare  mountain-sides  or  the 
stunted  animal  life  of  arid  plains.  This  lends 
tremendous  interest  to  the  question,  Is  such 
poverty  necessary  and  inevitable? 

Deliberate  expressions  emanating  from  vari- 
ous quarters  have  maintained  the  necessity  of 
poverty.  Of  these,  the  exploitation  of  Biblical 
texts,  "the  poor  shall  never  cease  out  of  the 
land,"  and  "ye  have  the  poor  always  with  you," 
is  the  most  familiar  and  the  least  creditable. 
Historically  this  argument  is  to  be  associated 
with  the  early  phase  of  emotional  faith  and 
material  relief  in  which  almsgiving,  having  de- 
tached itself  from  philanthropy  on  the  one  side 
and  from  social  good  on  the  other,  degenerated 
into  a  mode  of  expiatory  penance.  ^^  Mr.  Lecky 
reminds  us  how  this  form  of  "selfish  charity," 
wherein  "men  gave  money  to  the  poor  simply 
and  exclusively  for  their  own  spiritual  benefit, 
and  the  welfare  of  the  sufferer  was  altogether 
foreign  to  their  thoughts,"  acquired  at  last 
gigantic  proportions,  and  exercised  a  most  per- 
nicious influence  upon  Christianity.  If  "alms 
are  paid  to  the  credit  of  the  giver,  and  are  real- 
ized as  such  by  him  in  the  after- world,"  the 
persistence  of  poverty  serves  some  end.    Want 


THE  NATURE   OF   POVERTY      13 

is  at  least  not  purposeless  if  salvation  may  be 
acquired  in  relieving  it.^^ 

In  our  own  day  an  appeal  to  Biblical  authority 
as  warrant  for  the  continued  existence  of  economic 
want  represents  a  vicious  exegesis  whereby 
humanitarian  appeal  is  perverted  into  quietist 
assent.  That  the  interval  between  wealth  and 
want  is  great,  that  standards  of  existence  are 
progressive,  that  material  well-being  is  social 
justice  —  this  is  the  real  meaning  of  the  mes- 
.sage.  Any  other  interpretation  implies  a  the- 
ology which  would  predestine  masses  of  men  to 
physical  suffering  and  mental  degradation  in 
order  that  the  well-endowed  may  attain  mental 
calm  and  spiritual  grace. 

Economic  radicalism  is  noisily  intolerant  as 
to  the  passing  of  poverty.  Socialism,  land  na- 
tionalization, administrative  inaction,  each  rests 
its  case  for  social  reconstruction  less  upon  evi- 
dence of  economic  want  or  upon  vistas  of  social 
betterment  than  upon  an  assumed  maleficence 
of  the  existing  industrial  order  whereby  the 
inevitable  corollary  of  capitalistic  wealth  is 
exploited  labor.  The  collectivist  theory  of  the 
progressively  increasing  misery  of  the  working- 
classes,  as  set  forth  in  the  Communist  Mani- 
festo of  1847,  maintained  that:  "The  modern 
laborer,  .  .  .  instead  of  rising  with  the  prog- 
ress of  industry,  sinks  deeper  and  deeper  below 


14     THE  ABOLITION  OF  POVERTY 

the  conditions  of  existence  of  his  own  class. 
He  becomes  a  pauper,  and  pauperism  develops 
more  rapidly  than  population  and  wealth. "^^ 
Henry  George  based  his  brilliant  polemic  upon 
the  assumption  that  "poverty  and  all  its  con- 
comitants show  themselves  in  communities  just 
as  they  develop  into  the  conditions  toward  which 
material  progress  tends";  and  again  that  "mate- 
rial progress  does  not  merely  fail  to  relieve  pov- 
erty —  it  actually  produces  it."  ^^  Mr.  Herbert 
Spencer  has  asserted  that  poverty  is  an  inevi- 
table incident  of  the  working-out  of  natural 
selection  in  social  evolution; ^^  and  the  laissez- 
faire  creed  of  extreme  individualism  is  para- 
phrased in  the  contention  that  "all  the  poverty 
and  misery  permeating  the  civilized  states, 
except  such  as  is  deliberately  self-inflicted  or 
the  result  of  ill-health,  are  due  to  temporary 
and  local  mistakes  in  legislation."^^ 

This  association  of  material  progress  and 
economic  misery  is  not  only  a  presupposition  of 
any  social  panacea,  but  the  assumption  upon 
which  its  urgency  rests.  Emphasizing  the  fu- 
tility of  any  other  method  of  relief  than  the 
particular  one  proposed,  such  assertion  of  the 
present  inevitableness  of  misery  resolves  itself 
into  propagandist  advocacy  of  an  economic 
specific.  It  may  be  too  much  to  claim  that  Karl 
Marx  himself,  frankly  acknowledging  the  bene- 


THE  NATURE  OF  POVERTY       15 

ficial  effects  of  factory  legislation,  "threw  over- 
board his  theory  of  increasing  misery"  ;i^  but 
certainly  scientific  socialism  has  relegated  the 
doctrine  to  minor  and  immaterial  rank.  Appro- 
priation of  "unearned  increments"  in  land  value, 
whether  in  part,  or  up  to  complete  nationaliza- 
tion, figures  in  present-day  debate  as  a  fiscal 
device  and  not  as  a  mode  of  social  reconstruc- 
tion. As  to  political  inaction,  the  same  inexorable 
pressure  of  social  expediency  which  for  a  cen- 
-tury  and  a  half  has  amended  successive  ideals 
of  "natural  liberty"  and  "natural  right,"  finds 
small  use  for  a  revamped  doctrine  of  human 
perfectibility  through  non-intervention.  Public 
sentiment  and  expert  opinion  are  agreed  that 
"government  may  attain  its  end  —  the  good  of 
the  people  —  by  some  more  effectual  process 
than  the  very  simple  and  easy  one  of  putting 
its  hands  in  its  pockets,  and  letting  them 
alone."  20 

There  is  finally  a  complacent  belief  in  the 
necessity  of  poverty,  born  of  class  privilege  and 
material  interest.  In  least  objectionable  phase, 
it  is  a  prepossession  rather  than  a  deliberately 
reasoned  judgment.  The  logic  employed  is 
hardly  more  than  that  the  immemorial  exist- 
ence of  poverty  is  presumptive  evidence  of  its 
place  in  the  general  scheme  of  things.  Yet  even 
in  this  form  it  is  the  mental  attitude  —  as  often 


i6     THE  ABOLITION  OF  POVERTY 

inarticulate  as  avowed  —  of  great  numbers  of 
intelligent,  well-endowed  men.  The  mischief  it 
begets  is  inertia  rather  than  resistance;  but  the 
net  evil  is  considerable.  Closely  related  is  the 
smug  conviction  that  all  poverty  is  sin  —  the 
consequence  of  thriftlessness,  prodigality,  in- 
temperance, unchastity,  even  irreligion.  Eco- 
nomic want  thus  becomes  the  penalty  of  moral 
or  spiritual  lapse,  destined  to  endure  because 
men  falter  in  conduct  or  in  faith.  Specific  cases 
of  poverty  are  undoubtedly  traceable  to  indi- 
vidual misconduct.  So,  too.  Professor  Huxley 
reminds  us  that  if  all  men  spontaneously  did 
justice  and  loved  mercy,  swords  might  be  ad< 
vantageously  turned  into  ploughshares,  and  the 
occupation  of  the  judges  and  police  would  be 
gone. 2^  But  to  utilize  these  considerations  in 
justification  of  social  inaction  is  economic 
Pharisaism,  neglecting  the  most  obvious  facts 
of  modern  industrialism  —  the  undeserved  pov- 
erty that  comes  from  involuntary  idleness,  from 
industrial  accident,  from  parasitic  occupation. 
It  is  the  holier-than-thou  doctrine  diverted  to 
economic  use. 

Against  such  postulates  of  theological  con- 
venience, industrial  fatalism,  and  class  quietism, 
the  general  body  of  economic  students  assert 
that  poverty,  understood  as  economic  insuffi- 
ciency, is  an  incident  of  industrial  evolution, 


THE  NATURE  OF  POVERTY       17 

not  an  essential  of  economic  structure;  that  its 
presence  implies  maladjustment,  not  normal 
working;  that  its  control  may  be  effected  by 
wise  social  policy,  and  that  its  ultimate  dis- 
appearance is  a  fair  inference  from  the  facts  of 
economic  experience.  Professor  Alfred  Marshall 
voices  this  doctrine  of  social  hopefulness  in 
declaring  that  just  as  we  have  outgrown  the 
conviction  that  slavery,  which  the  classical  world 
regarded  as  an  ordinance  of  nature,  is  neces- 
sary, so  we  are  abandoning  the  belief  that  pov- 
erty must  exist,  or  that  there  need  be  great 
numbers  of  people  foredoomed  from  their  birth 
to  grinding  toil,  unrewarded  by  even  the  bare 
necessities  of  decent  existence.^^  To  point  out 
the  theoretical  warrant  for  such  conclusions 
and  to  outline  the  practical  measures  whereby 
they  may  be  realized  will  be  the  purpose  of  the 
following  pages. 


CHAPTER  II 

THE  SOCIAL  SURPLUS 

The  basis  of  social  well-being  is  an  adequate 
supply  of  economic  goods  and  services.  Society 
can  only  enjoy  a  decent,  wholesome  life  if  human 
effort  as  applied  to  natural  elements  produces 
at  least  as  much  as  must  be  consumed  in  the 
course  of  such  production.  Every  assertion  of 
the  needlessness  of  poverty  in  the  modern  state 
is  therefore  conditioned  upon  the  assumption 
that  national  production  equals  a  reasonable 
subsistence  requirement.  It  is  because  the  whole 
loaf  is  large  enough  to  satisfy  the  hunger  of  all 
who  must  be  fed  that  individual  want  is  intol- 
erable. 

The  history  of  economic  growth  has  here  been 
significant.  Starting  from  a  rude  social  order 
wherein  bare  and  uncertain  existence  was  the 
most  that  man  could  wrest  from  nature,  society 
has  attained  an  incredible  economic  produc- 
tivity by  the  development  of  intellectual  force 
and  manual  dexterity,  by  the  more  efficient 
arrangement  of  its  own  powers,  and  most  of  all 
by  the  discovery  and  utilization  of  natural 
energies.    The  diffusion  of  comforts,  the  possi- 


THE  SOCIAL  SURPLUS  19 

bility  of  luxuries,  the  rise  of  arts  and  letters, 
the  spread  of  culture  —  in  a  word,  the  develop- 
ment of  civilization  is  the  consequence  of  in- 
creased economic  production. 

There  is  no  assignable  limit  to  the  increase 
of  the  economic  product.  The  reasons  for  this  7" 
are  clear.  The  goods  and  services  which  satisfy 
economic  wants  and  so  make  up  the  category 
of  wealth  are  the  results  of  definite  factors  — 
labor,  capital,  natural  agents,  and  directive 
.intelligence  —  working  in  joint  association.  As 
each  constituent  element  increases,  whether  in 
amount  or  in  specific  efficiency,  the  resultant 
product  increases.  The  degree  of  increase  of  a 
given  factor  need  not  necessarily  correspond 
to  that  of  the  product.  Indeed,  other  things  being 
equal,  an  increase  in  the  productive  factor  which 
has  been  present  in  industrial  enterprise  in 
normally  efficient  ratio  —  as  labor  in  a  well- 
populated  country  or  capital  in  a  creditor  state 
—  will  be  attended  by  a  less  than  corresponding 
increase  in  total  product.  But  the  assumption 
of  other  things  in  the  world  of  economic  produc- 
tion being  equal  is  rarely  warranted.  The  les- 
son of  modern  industrial  history  has  been  that 
an  increase  of  one  factor  ordinarily  compels  a 
more  efficient  rearrangement  of  existing  forces, 
and  thus  secures  a  larger  product.  As  long  as 
the  supply  of  laborers  augment  in  number  and 


20    THE  ABOLITION  OF  POVERTY 

in  skill,  as  long  as  the  motives  operate  that  lead 
to  capital  accumulation  by  the  foregoing  of 
present  for  future  satisfaction,  as  long  as  the 
secret  energies  of  nature  continue  to  be  unearthed 
and  utilized,  as  long  as  captains  of  industry  are 
evolved  with  gifted  faculties  of  leadership  —  so 
long  may  the  total  product  of  industry  be  ex- 
pected to  increase  in  greater  proportion  than 
those  whose  necessary  wants  it  must  supply. 

The  economic  pessimism  of  a  century  ago  fore- 
cast a  cyclical  arrest  of  economic  production 
with  the  increase  of  mankind,  and  this  threat 
of  overpopulated  retrogression  is  still  occasion- 
ally revived.  Foreshadowed  in  economic  litera- 
ture of  the  eighteenth  century,  the  doctrine 
figures  in  the  history  of  social  philosophy  as 
*'the  principle  of  population"  of  Thomas  Robert 
Malthus.  It  has  been  said  that  Malthus  wrote 
a  book  which  nobody  reads  and  everybody 
abuses. 23  Certainly  the  actual  content  of  the 
"Essay,"  in  light  of  the  circumstances  under 
which  it  was  originally  composed  and  of  the 
notable  changes  which  successive  editions  under- 
went, is  very  different  from  prevailing  mis- 
conceptions as  to  its  meaning  and  purpose. 

Malthus  wTote  in  1798,  in  denial  of  the  con- 
tention of  William  Godwin  that  the  repeal 
of  government  and  law  would  make  possible 
the  existence  and  permanence  of  a  society  "all 


THE  SOCIAL  SURPLUS  21 

the  members  of  which  should  live  in  ease,  hap- 
piness, and  comparative  leisure."  Waiving  any 
question  as  to  the  temporary  effectiveness  of 
the  particular  device  proposed,  Malthus  rested 
his  case  against  such  perfectibility  exclusively 
upon  the  consideration  —  in  comparison  with 
which  all  other  arguments  seemed  of  "slight 
and  subordinate"  import  —  that  population 
tended  to  increase  in  a  geometrical  ratio  and 
food  in  an  arithmetical  ratio,  with  the  result 
that  population  is  perpetually  reduced  in  num- 
bers and  in  condition  to  the  subsistence  level, 
with  concomitant  vice  and  misery. ^^ 

In  his  own  lifetime  Malthus  amended  the  two 
fundamental  assumptions  upon  which  his  doc- 
trine was  based.  The  geometrical  ratio  was 
qualified  by  recognition  of  the  principal  of  moral 
restraint,  and  the  arithmetical  ratio  was  made 
contingent  upon  a  law  of  diminishing  returns  in 
agriculture.  The  subsequent  history  of  the  doc- 
trine has  involved  further  modification  of  these 
two  essentials.  As  to  "the  passion  between  the 
sexes"  which  Malthus  believed  would  always 
remain  "nearly  in  its  present  state,"  regard  has 
been  had,  on  the  one  hand,  to  the  claim  of  the 
biologists  that  "the  progress  of  civilization  must 
inevitably  diminish  fertility,  and  at  last  destroy 
its  excess,"  25  and,  on  the  other  hand,  to  the 
contention  of  social  philosophers  that  democ- 


22    THE  ABOLITION  OF  POVERTY 

racy  strives  for  a  higher  standard  of  comfort 
by  delayed  marriage  and  diminished  birth-rate. 
Similarly,  the  tendency  of  the  soil  to  yield  dimin- 
ishing product  with  successive  application  of 
labor  and  capital  has  been  restated  in  the  light 
of  the  progressive  improvement  in  agricultural 
arts  and  the  recurring  exploitation  of  uncul- 
tivated areas.^* 

The  present  import  of  the  Malthusian  doc- 
trine in  relation  to  economic  progress  might 
accordingly  be  defined  briefly  as  a  series  of 
^  unfavorable  tendencies  as  to  birth-rate  and 
i?  food-supply  counteracted  in  net  practical  effect 
by  a  group  of  opposing  favorable  tendencies. 
This  is  true  even  as  to  primary  food.  In  the  last 
fifteen  years  the  population  of  the  civilized 
world,  excluding  China,  has  been  increasing  at 
the  rate  of  about  i  per  cent  a  year,  whereas  the 
average  annual  increase  in  the  five  great  cereals 
—  wheat,  corn,  oats,  rye,  and  barley  —  has  been 
about  2.5  per  cent.  In  other  words,  production 
has  increased  two  and  a  half  times  as  much  as 
was  necessary  to  keep  per-capita  consumption 
constant. 2^  Social  experience  and  industrial 
outlook  suggest  that  as  the  population  of  the 
civilized  world  grows  larger  there  is  likely  to  be 
a  yet  greater  supply  of  economic  goods  and 
services,  with  the  resultant  possibility  of  ampler 
provision  for  each  individual  member  of  society. 


THE  SOCIAL  SURPLUS  23 

This  conclusion  tias  been  set  forth  with  even 
greater  definiteness  by  Mr.  Rowntree  in  the 
final  sentence  of  his  notable  study  of  modern 
poverty:  "The  dark  shadow  of  the  Malthusian 
philosophy  has  passed  away,  and  no  view  of  the 
ultimate  scheme  of  things  would  now  be  accepted  'v. 
under  which  multitudes  of  men  and  women  are 
doomed  by  inevitable  law  to  a  struggle  for  exist- 
ence so  severe  as  necessarily  to  cripple  or  destroy 
the  higher  parts  of  their  nature."  ^^ 

A  familiar  corollary  of  the  Malthusian  doc-  ' 
trine  has  to  do  with  the  increased  cost  of  raw 
materials,  growing  out  of  the  assumedly  greater 
difficulty  attending  their  production.  The  clas- 
sical political  economy  —  given  characteristic 
form  in  the  decades  following  the  Napoleonic 
contest  and  influenced  largely  by  the  contrast- 
ing agricultural  depression  and  the  industrial 
prosperity  of  early  nineteenth-century  England 
—  drew  sharp  distinction  between  the  produc- 
tion of  raw  materials  and  the  working-up  of 
such  materials  into  finished  products.  The  one 
category  was  subject  to  a  law  of  diminishing 
returns,  the  other  to  a  law  of  increasing  returns, 
and  the  preponderance  of  one  or  the  other  ele- 
ment in  the  composition  of  economic  goods 
determined  whether  a  larger  population  could 
be  better  or  worse  sustained.  Thus  Senior  fore- 
cast,  not  without   a  certain  uneasiness,   that 


24     THE  ABOLITION  OF  POVERTY 

there  would  be  no  limit  to  the  increase  of  wealth 
and  population  in  Great  Britain  if  the  supply 
of  raw  produce  could  but  keep  pace  with  the 
power  of  working  it  up.^^  And  Mill,  although 
holding  to  the  law  of  increasing  returns  with 
more  reserve,  still  maintained  that  as  popula- 
tion and  industry  advanced,  the  exchange  values 
of  manufactured  articles  relative  to  agricultural 
products  showed  a  certain  and  decided  tendency 
to  fall.3o 

Later  analysis  has  divested  the  classical  for- 
mula of  misleading  simplicity  by  giving  its  terms 
at  once  a  wider  and  a  more  guarded  applica- 
tion. It  is  possible  to  point  to  certain  areas  of 
the  populated  globe  or  to  certain  periods  in  the 
world's  history  in  which  population  has  literally 
caught  up  with  and  gone  beyond  the  volume  of 
wealth  production.  Adam  Smith  characterized 
the  condition  of  such  a  society  as  declining,  in 
contrast  to  advancing  or  stationary,  and  be- 
lieved that  the  cause  of  retrogression  was  that 
"the  funds  destined  for  the  maintenance  of 
labor  were  sensibly  decaying,"  with  a  conse- 
quent reduction  of  the  wages  of  labor  to  "the 
most  miserable  and  scant  subsistence."^^  A 
broader  survey  of  social  progress  has  enlarged 
the  element  of  truth  in  Adam  Smith's  analysis. 
A  society  wherein  population  is  increasing  with- 
^    out  restraint  and  wherein  the  inventive  arts  have 


THE  SOCIAL  SURPLUS  25 

become  stagnant  will  inevitably  press  upon  the 
bare  limits  of  physical  subsistence.  But  this  law 
of  social  stagnation,  like  the  possible  advent 
of  an  era  of  diminishing  returns,  is  no  explana- 
tion of  the  poverty  which  looms  up  so  forbidding 
in  the  modern  industrial  state.  Far  from  being 
in  declining  or  even  in  stationary  condition,  the 
civilized  world  of  to-day  is,  and,  barring  brief  in- 
tervals and  small  areas,  has  for  a  long  time  been, 
advancing  in  all  elements  that  affect  the  rela- 
tive supply  of  economic  goods. 

A  generation  ago  Sir  Robert  Giffin  called 
attention  to  the  fact  that  those  countries  of 
Europe  —  England,  Russia,  Germany,  France, 
Austria,  and  Italy  —  which  had  for  a  century 
been  increasing  enormously  in  population,  had 
been  increasing  even  more  remarkably  in 
wealth. ^2  This  tendency  has  since  continued. 
In  Great  Britain,  for  example,  the  national  in- 
come increased  from  £27  per  head  in  1867  to 
£40  per  head  in  1901,  or  a  gain  of  nearly  fifty 
per  cent.  As  compared  with  the  increase  in 
population  the  principal  industries  in  the  United 
Kingdom  have  similarly  outstripped  the  in- 
crease in  numbers  in  the  past  fifty  years.  The 
production  of  coal,  relative  to  population,  has 
increased  from  2.62  tons  to  6.07  tons;  of  pig 
iron,  from  13.5  tons  to  22.9  tons;  of  shipbuilding, 
from  9.72  tons  to  23.52  tons;  the  consumption 


26     THE  ABOLITION  OF  POVERTY 

of  raw  cotton  has  increased  from  28.1  pounds  to 
44.7  pounds,  and  of  raw  wool,  from  10.40  pounds 
to  13.46  pounds.^^ 

Even  more  notable  development  might  be 
anticipated  in  a  new  country  such  as  the  United 
States,  blessed  with  a  vast  area  of  virgin  soil, 
endowed  with  marvelous  natural  resources,  and 
inhabited  by  a  sturdy  and  ingenious  popula- 
tion. As  a  matter  of  fact  American  economic 
opinion  early  dissented  from  the  gloomy  views 
of  the  English  classical  group.  In  1820  Daniel 
Raymond  admitted  that  although  it  was  im- 
possible to  discover  any  flaw  in  Malthus's  rea- 
soning, "yet  the  mind  instinctively  revolts  at 
the  conclusions  to  which  he  conducts  it,  and  we 
are  disposed  to  reject  the  theory,  even  though 
we  could  give  no  reason  for  rejecting  it."^^  Go- 
ing further,  Henry  C.  Carey  in  1835  asserted, 
"I  am  not  aware  of  a  fact  in  his  [Mai thus]  book 
in  regard  to  man  in  a  state  of  civilization,  that 
goes  to  support  his  theory,"  and  added,  "If  not 
disturbed  in  its  growth,  capital  will  increase 
more  rapidly  than  population,  and  with  its  in- 
crease will  be  increase  of  education,  and  of  all 
comforts,  moral  and  physical. "^^  Subsequent 
opinion  may  have  receded  somewhat  from  the 
high  mark  of  Carey's  optimism,  but  it  still  leaves 
incredible  the  opinion  that  existing  poverty 
in  the  United  States  is  the  consequence  of  abso- 


THE  SOCIAL  SURPLUS  27 

lute  dearth.  If  elements  of  the  population  have 
for  any  considerable  time  received  incomes  less 
than  sufficient  to  maintain  decent  and  wholesome 
existence,  the  explanation  is  something  other 
than  that  the  total  product  was  not  sufficient 
to  supply  them. 

This  conclusion  is  confirmed  by  the  actual 
course  of  economic  production  in  the  United 
States.  It  will  scarcely  be  maintained  that  in 
1800, —  to  take  a  safe  starting-point, —  when 
the  population  of  the  United  States  was  some 
five  millions  and  fertile  land  was  to  be  had  vir- 
tually for  the  asking,  any  poverty  which  may 
have  existed  therein  was  a  necessary  result  of 
insufficient  wealth  production.  Yet  only  a  few 
years  thereafter  Daniel  Raymond  declared, 
"In  the  United  States  also  we  find  that  pau- 
perism prevails  in  different  parts  in  proportion 
to  the  unequal  division  of  property.  There  are 
more  paupers  in  the  cities  than  in  the  country, 
and  fewer  in  New  England  than  in  any  other 
part  of  the  country;  because  property  is  more 
unequally  divided  in  the  cities  than  in  the 
country,  and  less  unequally  divided  in  New  Eng- 
land than  in  any  other  part  of  the  country."  2® 

During  the  first  fifty  years  of  the  century, 
from  1800  to  1850,  population  increased  from 
5,308,483  to  23,191,876,  or  four-fold.  For  this 
period  no  serviceable  figures  of  national  pro- 


28    THE  ABOLITION  OF  POVERTY 

duction  are  available.  But  bearing  in  mind  that 
it  was  the  half-century  of  internal  improvement 
and  railroad  construction,  of  frontier  extension 
and  of  industrial  awakening,  a  conservative 
estimate  might  certainly  assume  that  the  in- 
crease of  wealth  at  least  kept  pace  with  the 
growth  in  population,  and  that  in  1850,  just 
as  in  1800,  any  poverty  which  may  have  existed 
in  the  United  States  is  not  to  be  explained  by 
national  dearth.  From  1850  on,  statistics  of 
wealth  production  are  obtainable,  and  rough 
comparison  of  the  relative  growth  of  popula- 
tion and  income  is  possible.  From  1850  to  1900 
the  population  of  the  United  States  increased 
from  23,191,876  to  75,994,575,  or  226  per  cent. 
But  in  this  same  period  the  production  of  the 
eight  great  cereals  increased  from  871,000,000 
to  4,434,000,000  bushels,  or  409  per  cent.^^  What 
was  true  of  increase  in  agricultural  production 
obtained  to  an  even  greater  extent  with  respect 
to  economic  goods  in  general  —  iron  and  steel, 
textiles  and  general  manufactures.  The  pro- 
duction of  wool,  relative  to  population,  increased 
from  2.26  pounds  in  1850  to  3.79  pounds  in  1900; 
of  cotton,  from  .09  bales  to  .13  bales;  of  coal, 
from  .27  tons  to  3.16  tons;  of  pig  iron,  from  .02 
tons  to  .18  tons;  of  steel,  from  .0005  tons  (in 
1867)  to  .13  tons;  of  petroleum,  from  .66  gallons 
(in    i860)    to   35.16   gallons;  of   manufactured 


THE  SOCIAL  SURPLUS  29 

products,  from  $43.94  to  $150.10;  of  total  exports 
and  imports,  from  $1370  to  $29.53.38 

In  recent  years,  material  progress  has  been 
as  remarkable.  Between  1900  and  1910,  the 
production  of  coal,  relative  to  population,  in- 
creased from  3.16  tons  to  4.86  tons;  of  pig  iron,^ 
from  .18  tons  to  .29  tons;  of  crude  steel,  from 
.13  tons  to  .28  tons;  of  crude  petroleum,  from 
35.16  gallons  to  95.69  gallons;  of  manufactured 
products,  approximately,  from  $150.10  to  $224.-  - 
76;  of  total  exports  and  imports,  from  $29.53 
to  $35.90.3^  The  per-capita  production  of  the 
principal  crops  underwent,  it  is  true,  decline, 
being  in  1909  a  little  more  than  nine  tenths  of 
that  in  1899.  Some  part  of  this  was  due  to  the 
extraordinary  circumstance  of  deficient  crops 
in  the  census  year;^°  but  the  essential  explana- 
tion is  that  this  decade  saw  foreshadowed  the 
inevitable  transition  of  the  United  States  from 
an  agricultural  to  a  manufacturing  society.  Like 
England  at  the  beginning  of  the  nineteenth 
century  and  Germany  in  our  own  generation, 
the  United  States  has  found  it  relatively  more 
profitable  to  apply  labor  and  capital  to  manu- 
facture than  to  agriculture,  and  to  discharge 
some  part  of  its  foreign  debits  by  exports  of  manu- 
factured goods  rather  than  agricultural  products. 

Monetary  estimates  of  national  wealth  are 
notoriously  defective  and  misleading;  but  con- 


30    THE  ABOLITION  OF  POVERTY 

fined  to  a  single  country  and  computed  for  a 
term  of  years,  they  are  serviceable  for  general 
economic  comparison.  The  true  value  of  all 
property  in  the  United  States  —  an  aggre- 
gate materially  less  than  that  of  "national 
wealth" —  is  estimated  to  have  increased  from 
$7,i35,78o,ocx)  in  1850  to  $107,104,212,000  in 
1904,  and  to  probably  not  less  than  $150,000,- 
000,000  in  1913.  In  the  same  period,  popula- 
tion increased  from  23,191,876  in  1850  to  82,- 
466,551  in  1904,  and  to  probably  not  less  than 
97» 1 63,330  in  191 3.  The  per-capita  estimate 
would  thus  show  an  increase  from  S307  in  1850 
to  $1318  in  1904  and  to  approximately  $1543  in 
1913.  In  short,  since  1850  the  increase  in  prop- 
erty, so  measured,  has  exceeded  the  growth  of 
population  as  five  to  one.*^ 

An  increase  in  national  surplus,  both  abso- 
t)  ^^  lute  and  relative  to  population,  is  conceivably 
^  not  incompatible  with  the  continued  necessity 
of  poverty.  Such  excess  may  be  absorbed  in 
raising  the  standard  of  existence  and  yet  be 
insufficient  to  eliminate  want.  It  has  long 
been  the  favorite  contention  of  economic  con- 
servatives that  poverty  as  insufficiency  represents 
the  rapidly  closing  gap  between  national  pro- 
duction and  necessary  consumption,  and  that 
the  improvement  in  the  condition  of  working- 
classes   attests   the   certainty  with  which   the 


THE  SOCIAL  SURPLUS  31 

tendency  is  proceeding.  We  are  reminded  that 
in  the  last  quarter  of  a  century  —  to  go  back 
no  farther  —  wages  have  risen  more  rapidly  than 
retail  prices;  that  "non-physical"  expenditures 
have  increased;  that  deposits  in  savings  banks 
have  augmented;  that  per-capita  consumption 
of  wheat,  sugar,  and  meat  have  grown;  that 
the  death-rate  has  declined;  and  that,  in  short, 
"the  experience  of  all  industrial  countries  with- 
out exception  shows  a  steady  and  unprecedented 
improvement  in  the  conditions  of  the  working- 
class."  42 

The  improving  status  of  the  working-classes 
is,  however,  no  answer  to  the  challenge  of  want. 
As  a  matter  of  fact,  imperfect  as  is  our  knowl- 
edge of  the  amount  of  poverty  existing  at  the 
present  time,  very  much  less  comparative  in- 
formation is  obtainable  for  earlier  periods.  The 
most  that  can  be  hazarded  is  that  there  is  no 
reason  to  conclude,  from  the  statistical  and 
historical  evidence  available,  that  the  amount  and 
intensity  of  poverty,  relative  to  population  and 
prevailing  standards  of  life,  is  markedly  less 
to-day  than  at  any  period  in  the  past  century 
similarly  placed  in  the  economic  cycle. 
;  Even  were  it  true,  however,  that  social  prog- 
ress is  moving  surely,  though  slowly,  toward 
the  elimination  of  want,  there  is  every  reason 
why  the  speed  should  be  accelerated  by  cautious 


32    THE  ABOLITION  OF  POVERTY 

and  tested  social  intervention.  It  is  preemi- 
nently here  that  the  wasteful  ruthless  course 
of  natural  selection  may  be  aided  by  deliberate 
selection.  For  the  social  surplus  to  be  applied 
to  improving  the  condition  of  working-classes 
with  minor  regard  to  the  outright  elimination 
of  poverty  is  a  misuse  of  increasing  national 
wealth.  If  any  such  alternative  be  necessary, 
it  is  far  better  that  want  should  cease  to  be  the 
lot  of  some  than  that  greater  comfort  should 
come  to  others. 

But  the  root  of  the  problem  lies  deeper.  Pov- 
erty, like  certain  of  its  primary  causes,  is  a  phase 
of  modern  industry.  The  very  forces  which 
increase  the  national  product  and  enlarge  the 
social  surplus,  if  left  to  themselves,  breed  con- 
ditions of  want.  As  machine  production  becomes 
more  intricate  and  operating  speed  more  in- 
tense, the  number  of  unavoidable  accidents  is 
likely  to  increase.  As  the  subdivision  of  indus- 
trial processes  grows  more  minute  and  the  use 
of  unskilled  labor  more  practicable,  the  under- 
payment of  unorganized  or  unorganizable  work- 
ers becomes  more  common.  As  business  com- 
petition waxes  more  acute  and  reserve  funds 
of  labor  are  found  more  economical,  unemploy- 
ment and  under-employment  become  chronic. 
Industrial  accident,  parasitic  employment,  in- 
voluntary idleness  are  thus  incidents  of  capi- 


THE  SOCIAL  SURPLUS  33 

talism.  Far  from  diminishing  with  increased 
wealth  production,  the  misery  resulting  from 
such  causes  is,  in  face  of  social  inaction,  likely  to 
augment  and  intensify.  Society  may  grow  richer, 
civilization  may  advance,  and  yet  poverty  con- 
tinue to  gnaw,  cancer-like,  at  its  vitals. 


CHAPTER  III 

THE  DISTRIBUTION  OF  INCOME 

The  existence  of  poverty  thus  passes  from  a 
problem  of  economic  production  into  a  prob- 
lem of  economic  distribution.  There  is  appar- 
ently enough  to  suffice.  The  national  dividend 
is  abundant  and  to  spare.  But  the  process  of 
allotment  seems  to  give  not  enough  to  many, 
and  by  inference  too  much  to  some. 

The  question  immediately  presents  itself  as 
to  whether  this  chronic  under-apportioning  is 
a  necessary  consequence  or  an  avoidable  inci- 
dent of  the  competitive  system,  understanding 
by  that  term  the  procedure  whereby  modern 
societies  distribute  the  national  dividend  among 
their  constituent  members.  In  economic  dis- 
cussion this  alternative  is  the  issue  between 
collectivism  and  social  regulation.  Collectivism 
asserts  that  poverty  is  an  inevitable  result  of 
capitalistic  industry,  and  insists  that  anything 
short  of  socialized  production  and  distribution 
is  an  ineffective  palliative.  Social  regulation, 
on  the  other  hand,  assumes  that  poverty  is  the 
transient  friction  which  attends  industrial  as  well 
as  physical  progress,  and  maintains  that  economic 


THE  DISTRIBUTION  OF  INCOME    35 

want  can  be  checked  and  eliminated  by  appro- 
priate social  treatment. 

It  cannot  be  too  strongly  emphasized  that 
neither  course  countenances  laissez-faire.  What-  ^' 
ever  welcome  may  have  been  accorded  the  policy 
of  non-intervention,  in  times  more  congenial 
to  the  acceptance  of  abstract  philosophical  doc- 
trines as  rules  of  economic  conduct,  there  is 
supreme  impatience  in  our  own  day  at  any  sug- 
gestion of  "administrative  nihilism"  as  a  re- 
sponse to  the  challenge  of  poverty.  Such  dicta 
as  "the  great  universal  progress  toward  indi- 
vidual liberty,  which,  as  far  as  can  be  known  ^ 
by  mortals,  is  the  first  and  immediate  object 
of  the  scheme  of  humanity,"  ^^  sound  as  archaic 
as  eighteenth-century  watchwords.  Even  though 
masked  in  the  more  respectable  phrases  of  bio- 
logical analogy,  laissez-faire  has  been  repudiated 
alike  by  public  sentiment  and  by  expert  opin- 
ion as  the  efficient  corrective  of  social  ills.  Were 
it  true  that  natural  selection,  working  raw  and 
unaided  in  social  evolution,  would  eventually 
extinguish  the  evil  of  poverty,  the  process  of 
elimination  would  yet  be  so  wasteful,  so  brutal- 
izing, as  to  insure  its  rejection  as  a  social  policy. 
But  as  a  matter  of  fact  it  is  not  clear  that  the 
survival  of  even  the  socially  fittest,  through  the 
operation  of  selection,  would  be  unattended  by 
poverty.    Indeed,  the  very  assumption  of  such 


36    THE  ABOLITION  OF  POVERTY 

a  process  is  a  struggling  mass,  crowded  down 
to  bare  subsistence,  from  which  survivorship 
is  possible  only  at  the  expense  of  continuing 
misery  and  want  on  the  part  of  the  undertrod- 
den.  It  is  a  lethargic  optimism  rather  than  any 
scientific  warrant  which  forecasts  the  elimina- 
tion of  poverty  through  social  inaction. 

This  is  the  lesson  of  all  labor  legislation.  Un- 
restricted competition  tends  to  preserve  rather 
than  reduce  the  socially  less  favorable  elements 
in  modem  business.  Left  to  itself  capitalistic 
industrialism  would  have  made  slow  progress 
in  the  improvement  of  working  conditions.  We 
seem  to  have  passed  far  beyond  the  represen- 
tation of  the  textile  industry  before  the  Lords* 
Committee  on  Child  Labor,  in  1818,  that  a 
fourteen-hour  working  day  —  from  six  in  the 
morning  until  eight  at  night  —  for  children, 
even  as  young  as  nine  years,  was  attended  with 
no  physical  disadvantage  and,  indeed,  tended  to 
improve  the  mental  and  moral  state  of  the  chil- 
dren ;  ^^  or  from  Senior's  contention  in  1 837  that 
the  exceeding  easiness  of  cotton-factory  labor 
rendered  long  hours  practicable;  that  the  whole 
net  profit  of  the  manufacturers  was  derived 
from  the  last  hour  of  the  working  day,  and  that 
a  reduction  of  the  number  of  hours  which  young 
persons  could  work,  from  twelve  to  ten  hours, 
would  be  utterly  ruinous  to  the  industry."*^  But, 


THE  DISTRIBUTION  OF  INCOME    37 

in  fact,  such  expressions  find  counterpart  in  the 
present-day  experience  of  every  industrial  state. 
They,  and  the  support  accorded  them,  can  best 
be  understood  as  the  desperate  efforts  of  mar- 
ginal enterprisers  rather  than  as  the  brutal  greed 
of  average  employers. 

Modern  industrial  products  are  composite 
with  respect  to  the  conditions  of  their  produc- 
tion. The  principles  of  differential  cost  and 
marginal  determination,  which  the  classical 
economists  conceived  as  peculiar  to  agriculture, 
prevail  over  the  whole  field  of  industry.  Just 
as  there  are  in  every  branch  of  business  "cap- 
tains of  industry,"  who,  by  reason  of  unusual 
ability,  favorable  location,  and  abundant  credit, 
are  able  to  reap  large  gains,  so  quite  at  the  other 
extreme  there  are  insecure  enterprises  limited 
in  opportunity,  handicapped  in  resources,  strug- 
gling on  from  month  to  month  to  maintain  busi- 
ness existence.  It  is  this  marginal  group,  driven 
to  all  conceivable  devices  to  effect  economies, 
who  define  the  competitive  base-line  from  which 
society  must  protect  itself. 

Diametrically  opposed  to  laissez-faire  in  con- 
tent, but  related  thereto  in  panacea-like  quality, 
is  the  proposal  of  collectivism  as  a  corrective  of 
poverty.  From  the  days  of  Owen  and  Saint- 
Simon,  socialistic  opinion  has  maintained  that, 
with  common  ownership  and  operation  of  all 


38    THE  ABOLITION  OF  POVERTY 

instruments  of  production,  and  with  common 
f^  apportionment  of  product  according  to  some 
predetermined  standard,  there  would  be  an  end 
of  economic  want.  Universal  conscription  in  an 
industrial  army,  elimination  of  competitive 
w^astes,  systematization  of  productive  energies 
are  to  provide  the  socialistic  state  with  a  tre- 
mendously enhanced  national  income,  sufficient 
to  raise  the  standard  of  living  materially  above 
the  necessary  minimum.  Just  as  collective 
operation  will  furnish  a  larger  product,  by  cor- 
recting the  planlessness  and  waste  of  competing 
production,  so  socialized  distribution,  by  pre- 
venting capitalistic  exploitation  and  by  replac- 
ing competitive  struggle  with  definite  allotment, 
will  insure  sufficient  individual  income.  There 
will  be  more  to  go  around,  and  social  justice  will 
make  certain  that  it  does  actually  so  go. 

Socialism  is  not  to  be  brushed  aside,  any  more 
than  laissez-faire  is  to  be  established,  by  an 
appeal  to  political  creed  or  economic  dogma. 
Competitive  industry,  like  private  property 
itself,  possesses  no  inherent  warrant  or  sanc- 
tity. It  is  an  economic  convention  utilized  by 
industrial  societies  on  sheer  ground  of  expedi- 
ency. The  product  of  industrial  evolution,  it 
retains  place  by  the  assumption  that  a  greater 
degree  of  human  welfare  can  be  attained  by 
this  device   than   by   any  other   arrangement. 


THE  DISTRIBUTION  OF  INCOME    39 

Once,  however,  apparent  that,  by  virtue  of 
changed  conditions  or  new  social  standards, 
competitive  industry  no  longer  secures  maxi- 
mum well-being  and  is  even  productive  of  grave 
social  hurt,  its  right  to  be  terminates. 

This  was  maintained  even  before  the  acute 
problems  of  modern  industrialism  had  arisen. 
*'For  though  I  don't  think  a  State  of  Nature  to 
compare  with  the  State  of  Civil  Government," 
wrote  Jacob  Vanderlint,  a  long-forgotten  eco- 
nomic writer  of  the  eighteenth  century,  "if  the 
Plenty  be  made  great  enough  to  support  the 
People  comfortably,  yet  if  the  Bulk  of  Mankind 
be  made  miserable  by  the  Oppression  of  the 
rest;  as  they  undoubtedly  are,  when  the  Wages 
of  the  Labourer,  and  Price  of  necessaries  for 
such  a  Family  as  he  must  often  sustain,  and  which 
indeed  he  was  chiefly  sent  into  this  World  to 
raise,  are  not  very  near  equal:  I  say,  such  an 
unhappy  State  of  Mankind  is,  in  my  Opinion, 
worse  than  a  State  of  Nature  itself."  ^^  A  cen- 
tury later,  economic  utilitarianism  definitely 
incorporated  into  its  creed  the  doctrine  that  the 
distribution  of  wealth  is  a  matter  of  human 
institution,  solely.  "The  things  once  there," 
John  Stuart  Mill  declared,  "mankind,  indi- 
vidually or  collectively,  can  do  with  them  as 
they  like.  They  can  place  them  at  the  disposal 
of  whomsoever  they  please,  and  on  whatever 


40    THE  ABOLITION  OF  POVERTY 

terms.  .  .  .  Even  what  a  person  has  produced 
by  his  individual  toil,  unaided  by  any  one,  he 
cannot  keep  unless  it  is  the  will  of  society  that 
he  should."  *7 

But  however  free  to  do  so,  society  is  not  likely 
to  enter  lightly  upon  a  radical  economic  recon- 
struction. There  must  be  undoubted  evidence 
that  the  new  arrangement  will  be  productive 
of  the  ends  contemplated  both  in  immediate 
and  in  net  result.  Socialism  has  hitherto  failed 
^  to  give  this  assurance.  It  has  not  even  made 
clear  that  collectivism  would  mean  a  larger  or 
even  as  large  a  national  dividend  —  the  funda- 
mental condition  of  any  real  social  betterment. 
As  against  the  economies  of  systematized  and 
non-competing  production,  the  socialistic  state 
would  suffer  the  losses  of  repressed  initiative 
and  standardized  service.  What  the  actual  out- 
come would  be  is  conjectural.  A  plausible  brief 
can  be  drawn  for  either  side,  and  in  the  absence 
of  confirmatory  evidence  and  with  the  impos- 
sibility of  experimental  verification,  the  case 
rests  simply  as  unproved. 

No  one  has  stated  this  issue  with  greater  clear- 
ness and  fairness  than  August  Schaffle:  "So- 
cialism would  have  to  give  the  individual  at 
least  as  strong  an  interest  in  the  collective  work 
as  he  has  under  the  liberal  system  of  produc- 
tion —  it  would  have  to  secure  to  every  sub- 


THE  DISTRIBUTION  OF  INCOME   4c 

group  a  premium  on  extraordinary  amounts  of 
collective  production,  and  a  loss  through  col- 
lective slackness;  it  is  as  much  and  still  more 
bound  to  bestow  effective  distinction  on  all 
special  success  in  technical  development,  and 
duly  to  reward  great  individual  merit;  and, 
finally,  would  have  to  provide  that  all  the  in- 
numerable labor  forces  should  be  directed  into 
the  channel  of  their  most  profitable  use,  not  by 
the  orders  of  an  authority,  but  by  the  force  of 
individual  interest.  Otherwise,  it  will  scarcely 
secure  a  fairer  distribution  of  the  national  prod- 
uce, and  certainly  not  greater  economy  in  social 
production,  than  is  on  an  average  secured  by 
the  liberal  industrial  system,  acting  through  the 
most  acute  stimulus  to  private  interest,  and 
by  proportioning  price  not  only  to  the  cost  of 
production,  but  also,  and  mainly,  to  the  value 
in  use  of  separate  services  and  commodities  at 
a  given  time  and  place,  and  in  a  given  trade  or 
industry."  ^^ 

This  uncertainty  as  to  the  outcome  of  collec- 
tivism as  a  system  of  production  has  received 
far  less  examination  than  it  merits.  Attention 
has  rested  too  exclusively  upon  the  obvious 
wastes  of  competitive  industry,  in  contrast  to 
the  conceivable  economies  of  socialized  produc- 
tion. Such  comparison  of  the  seen  with  the  un- 
seen serves  useful  purpose  in  remedial  criticism; 


42    THE  ABOLITION  OF  POVERTY 

it  affords  no  sufficient  ground  for  attempted 
reconstruction. 

There  remains  the  possibility  that  collec- 
tivism, though  resulting  in  no  increased  national 
product  nor  even  in  one  as  large,  might  never- 
theless reduce  or  eliminate  existing  want  through 
the  socialized  distribution  of  what  is  actually 
so  produced.  An  increased  product  would  be 
desirable;  but  an  equivalent  or  even  a  reduced 
product,  if  it  be  more  reasonably  distributed, 
might  solve  the  problem.  Just  as  there  is  un- 
certainty as  to  whether  socialized  production 
would  result  in  increased  yield,  so  there  is  doubt 
as  to  the  wider  consequence  and  ultimate  effect 
of  socialized  distribution  upon  individual  well- 
being.  The  mental  progress,  the  moral  charac- 
ter, the  numerical  increase  of  the  race,  are  all 
obviously  involved,  but  with  what  result  no 
man  has  yet  been  able  to  make  convincingly 
clear. 

It  is  this  perilous  uncertainty  that  has  led 
the  hard  sanity  of  the  thinking  elements  of  the 
community  to  refuse  a  leap  in  ':he  dark,  and  at 
the  same  time,  profoundly  moved  by  the  com- 
pelling evidence  of  social  dislocation,  to  accept 
as  its  inarticulate  creed  the  noble  declaration 
of  John  Stuart  Mill,  voiced  two  generations 
ago:  *Tf,  therefore,  the  choice  were  to  be  made 
between  Communism  with  all  its  chances,  and 


THE  DISTRIBUTION  OF  INCOME   43 

the  present  state  of  society  with  all  its  suffering 
and  injustices,  ...  all  the  difficulties,  great  or 
small,  of  Communism  would  be  but  as  dust  in 
the  balance."  *^ 

Repudiating  laissez-faire,  but  unwilling  save 
as  a  final  resort  to  venture  upon  the  uncharted 
sea  of  socialism,  the  economist  searches  for  some 
less  drastic  method  by  which  the  desired  end 
can  be  attained  more  certainly,  and  without  at- 
tendant evils  of  greater  magnitude.  This  has  been 
carefully  phrased  by  a  recent  thoughtful  writer : 
"The  problem  of  the  future  is  to  devise  a  gradual 
modification  of  the  system  [of  property]  by  which 
its  advantages  —  the  encouraging  of  industry, 
originality,  energy,  enterprise,  individuality  which 
it  affords,  the  measure  of  liberty  for  all  and  the 
greater  liberty  which  it  secures  for  a  few,  the 
training  in  character  and  the  development  of 
individuality,  the  sense  of  responsibility  and  of 
family  solidarity  which  it  encourages  —  shall 
be  secured  without  the  outrageous  inequalities, 
the  material  hardships  and  uncertainties,  and 
the  injury  to  character  which  are  produced  alike 
by  excessive  wealth  and  excessive  poverty."  ^° 

Constructive  social  regulation  offers  this  pos- 
sibility. It  recognizes  the  intolerable  evils  of 
poverty,  but  insists  that  preventive  measures 
are  possible,  quite  as  effective  and  far  less  peril- 
ous than  those  which   involve   radical  change 


44    THE  ABOLITION  OF  POVERTY 

in  the  existing  industrial  order.  It  proposes  to 
retain  the  competitive  system  of  industry,  both 
as  to  production  and  distribution,  but  to  impose 
thereon,  by  restraint  of  law  and  by  pressure 
of  public  opinion,  such  limitation  and  control 
as  experience  demonstrates  to  be  necessary  for 
the  largest  social  interest.  This  means  a  sys- 
tematic attack  upon  the  primary  causes  of  pov- 
erty, in  lieu  of  the  symptomatic,  detailed  treat- 
ment of  the  old  poor-relief. 

It  has  not  been  easy  for  society  to  realize  that 
poverty  is  not  of  necessity  the  result  of  the 
mental  weakness  or  moral  lapse  of  the  individ- 
ual; that  thrift,  chastity,  and  even  religious 
faith  do  not  secure  release  from  galling  want; 
and  that  modern  industrialism  has  intensified 
the  liability  of  the  wage-earner  to  sink  into  eco- 
nomic need  through  no  fault  of  his  own.  Thanks 
to  the  profound  influence  of  biological  science 
upon  common  thought,  some  appreciation  of 
these  principles  has  entered  the  public  mind. 
With  it  has  come  the  new  realization  that  just 
as  the  causes  of  poverty  are  deep-seated  and 
remote,  so  the  treatment  must  be  fundamental 
and  definitive.  Similarly,  public  effort  for  the 
elimination  of  want  has  been,  up  to  the  present 
day,  opportunist  and  unrelated.  Evoked  ordi- 
narily by  glaring  disclosure  of  the  tragedy  of 
want  or  by  specific  exhibits  of  social  wreckage, 


THE  DISTRIBUTION  OF  INCOME    45 

such  effort  has  commonly  taken  the  form  of  posi- 
tive treatment  of  local  disturbance  rather  than 
preventive  correction  of  deep-seated  disorder. 
There  has  never  been  a  well-considered,  delib- 
erately planned  campaign  against  the  causes  of 
poverty,  looking  forward  to  its  definite  elimi- 
nation as  a  form  of  social  disease.  Until  such 
effort  has  been  made  —  and  failed  —  it  is  neither 
scientifically  sound  nor  tactically  wise  to  aban- 
don an  existing  industrial  order  for  a  new  and 
untried  one. 

More  than  three  hundred  years  ago,  an  earnest 
economic  writer  made  inquiry  into  "the  canker 
of  the  common  wealth."  The  title-page  of  the 
tract  set  forth  that  "the  Author  imitating  the 
rule  of  good  Phisitions,  First,  declareth  the  dis- 
ease. Secondarily,  sheweth  the  efficient  cause 
thereof.  Lastly,  a  remedy  for  the  same."  Ma- 
lynes's  problem  was  local  and  his  answer  tran- 
sient. But  in  declared  plan  his  long-forgotten 
treatise  anticipated  the  best  type  of  modern 
social  endeavor. ^^ 


CHAPTER  IV 

THE  RATE  OF  WAGES 

Poverty,  in  its  practical  aspect,  is  a  phase  of 
the  wage  question.  Large  bodies  of  toilers  are 
in  receipt  of  incomes  less  than  enough  to  main- 
tain wholesome  existence,  and  it  is  from  this 
class  that  the  mass  of  poor  are  mainly  recruited. 

This  conclusion  does  not  overlook  the  misery- 
breeding  effect  of  an  unfavorable  social  environ- 
ment and  an  inadequate  public  service.  One  of 
the  most  competent  students  of  modern  social 
conditions  finds  a  cause  of  dependence  greater 
than  any  other,  except  that  of  defective  educa- 
tion, in  the  fact  that  society  surrounds  the  in- 
dividual with  many  pitfalls  that  are  not  easily 
discerned  and  from  which  the  average  man 
cannot  keep  free:  "infection  from  contagious 
diseases,  congestion  making  disease  easy,  unsani- 
tary and  unlighted  and  unventilated  dwellings 
from  among  which  the  individual  tenant  must 
choose  his  home,  impure  milk  the  chief  cause 
of  infant  mortality,  and  impure  water  from  which 
the  individual  has  no  sufficient  defense,  dirty 
streets,  contaminated  air,  adulterated  food."  ^^ 


THE  RATE  OF  WAGES  47 

In  much  the  same  way,  the  failures  of  society 
to  afford  efficient  governmental  service  and  to 
provide  adequate  police  regulation  are  to  be 
accounted  causes  of  individual  need.  Economical 
administration,  prompt  legal  redress,  equitable 
taxation,  on  the  one  hand,  and  labor  legislation 
as  to  the  employment  of  women  and  children, 
the  use  of  safety  appliances,  and  the  provision 
of  sanitary  working  environment,  on  the  other 
hand,  mean  greater  well-being. 

Yet  in  the  largest  sense,  it  remains  true  that 
the  most  effective  aid  for  those  below  the  pov- 
erty line  lies  in  the  increase  of  income.  Apart 
from  its  efficacy,  it  is  the  procedure  most  con- 
sistent with  personal  independence  and  indi- 
vidual self-respect.  Social  workers  have  often 
noted  the  languid  interest,  sometimes  the  vague 
resentment,  entertained  by  wage-earners  against 
projects  of  patronal  aid  and  welfare  work  —  even 
extending  to  an  attitude  of  relative  indifference 
to  the  enactment  of  favorable  labor  legislation. 
The  explanation  lies  in  the  workingman's  deep- 
rooted  conviction  —  the  product  of  long  and 
bitter  industrial  experience  —  that  the  well- 
being  which  comes  to  him  in  the  form  of  increased 
earnings  is  more  substantial  for  the  present  and 
more  promising  for  the  future  than  either  the 
philanthropically  inspired  benevolence  of  his 
employer  with  its  restraints  and  involvements, 


48    THE  ABOLITION  OF  POVERTY 

or  the  final  resort  of  legal  enactment  with  its 
delays  and  uncertainties. 

The  insufficient  income  of  normally  compe- 
tent workmen  means  either  that  the  mechanism 
^  of  wage  determination  is  socially  unsound,  or 
<  that  the  mode,  while  sound  in  itself,  is  perverted 
by  impeding  forces.  Modern  economic  philo- 
sophy maintains  the  latter  view,  and  denies  that 
an  insufficient  wage  is  a  necessary  consequence 
of  free  industrial  contract.  This  may,  indeed, 
be  fairly  described  as  the  trend  of  authoritative 
economic  opinion  from  the  days  of  Adam  Smith. 

The  "iron  law"  of  wages  was  read  into  the 
classical  political  economy  by  reactionary  exag- 
/^  geration,  and  thereafter  crudely  identified  with 
its  tenets  by  those  well-meaning  reformers  whose 
economic  equipment  is  traceable  to  Cobbett 
and  Carlyle.  As  a  matter  of  fact,  Adam  Smith, 
Malthus,  and  Ricardo  were  of  one  mind  in  main- 
taining the  possibility  of  economic  betterment. 
[Not  a  bare  level  of  subsistence  but  a  progres- 
[sive  standard  of  comfort  determined  wages,  and 
as  to  this:  "The  friends  of  humanity  cannot  but 
wish  that  in  all  countries  the  labouring  classes 
should  have  a  taste  for  comforts  and  enjoy- 
ments, and  that  they  should  be  stimulated  by 
all  legal  means  in  their  exertions  to  procure 
them."^^  In  much  the  same  way,  the  formalism 
of  the  wage-fund  doctrine  was  distorted,  by 


THE  RATE  OF  WAGES  49 

minor  text-writers  in  the  early  nineteenth  cen- 
tury, into  a  depressing  cycle  of  increasing  labor- 
supply  and  minimum  remuneration.  But  more 
rational  views  prevailed,  and  a  succession  of 
economists,  from  Richard  Jones  and  Montifort 
Longfield,  through  John  Stuart  Mill,  to  Longe, 
Thornton,  Cliffe  Leslie,  Jevens,  and  Walker, 
insisted  that  the  laborer's  destinies  lay  abso- 
lutely in  his  own  hands. 

The  consensus  of  present-day  opinion  among 
political  economists  that  poverty  is  not  a  neces- 
sary consequence  of  the  wage  system  is  unaf- 
fected by  the  striking  lack  of  agreement  as  to 
the  principle  determining  the  rate  of  industrial 
remuneration.  Whether  wages  are  governed 
by  the  cost  of  "producing  the  laborer,"  or  by 
the  laborer's  standard  of  life,  or  by  the  ratio  of 
the  labor-supply  to  the  amount  of  available 
capital,  or  by  the  residual  left  from  other  dis- 
tributive shares,  or  by  the  specific  productivity 
imputable  to  marginal  labor,  is  far  from  deter- 
mined. Recent  semi- judicial  inquiries  as  to  the 
normal  rate  of  wages  in  given  industries  have 
referred  to  the  disappointing  failure  of  economic 
science  to  provide  practicable  standards  of 
reference.  The  Board  of  Arbitration,  in  the 
1 91 2  controversy  between  the  Eastern  Railroads 
and  the  Brotherhood  of  Locomotive  Engineers, 
sought  vainly  for   "some  theoretical  relation, 


50    THE  ABOLITION  OF  POVERTY 

for  a  given  branch  of  industry,  between  the 
amount  of  the  income  that  should  go  to  labor 
and  the  amount  that  should  go  to  capital." 
After  asserting  that  "political  economy  is  unable 
to  furnish  such  a  principle  as  that  suggested," 
the  arbitral  award  took  refuge  in  standardiza- 
tion between  different  areas  as  "the  basis  upon 
which  a  judgment  may  be  passed  as  to  whether 
the  existing  wage  scale  of  the  engineers  in  the 
Eastern  District  is  fair  and  reasonable."  ^^  So, 
too,  the  Massachusetts  Commission  on  Mini- 
mum Wage  Boards  (191 2)  not  only  flatly  denied 
the  existence  of  "an  economic  law  which,  by 
some  mysterious  but  certain  process,  correlates 
earnings  and  wages,"  but  asserted  that  "wages 
among  the  unorganized  and  lower  grades  of 
labor  are  mainly  the  result  of  tradition  and  of 
slight  competition."  " 

It  is  probable  that  the  rival  wage  doctrines 
of  modern  political  economy  represent  related 
facets  of  a  general  truth,  and  that  opposed 
theories  of  distribution  emphasize  but  successive 
aspects  of  a  common  uniformity.  Certainly  such 
doctrines,  however  different  in  other  respects, 
are  identical  in  what  is  in  this  connection  the 
essential  particular, —  agreement  that  there  is 
nothing  inherent  in  or  disclosed  by  any  accredited 
wage  theory  necessarily  to  preclude  the  toiler 
from  securing  an  economically  sufficient  wage 


THE  RATE  OF  WAGES  51 

Thus  the  cost-of-production  theory  insists  that 
wages  must  be  at  least  high  enough  to  enable 
the  laborer  to  rear  a  family  in  unimpaired  vigor. 
If  depressed  below  this  minimum,  increased 
mortality  will  so  reduce  the  supply  of  laborers 
as  to  insure  return  to  the  higher  level  through 
the  competitive  bids  of  the  employers.  Stated 
in  modified  form,  this  doctrine  becomes  the 
standard-of-life  theory,  wherein  the  welfare  of  * 
the  wage-earner  is  regarded  as  resting  in  his 
own  hands,  being  much  or  little  above  the  level  y  ^ 
of  bare  subsistence,  according  to  the  degree  of/  \^ 
his  insistence,  in  wage  bargaining,  upon  a  remu- 
neration sufficient  to  maintain  or  even  improve 
habits  of  comfort.  The  explanation  of  wages 
as  a  phase  of  the  demand-and-supply  formula 
has  discarded  the  hidebound  rigidity  of  the  old  ^ 
wage-fund  doctrine,  and  simply  sets  forth  that 
the  conditions  of  employment  at  any  given  time 
and  place  are  affected  by  the  ratio  of  available 
capital  to  the  supply  of  localized  labor,  but  that 
wages  cannot  for  any  considerable  time  remain 
below  the  level  of  an  existence  minimum.  Going 
beyond  this,  the  residual-claimant  theory  em- 
phasizes the  possibility  of  the  wage-earner  ^ 
securing,  in  supplement  of  a  necessary  minimum, 
not  only  the  benefit  of  his  own  greater  efficiency, 
but  even  a  major  part  of  the  general  gains  of 
social  progress.  Finally,  the  productivity  theory 


52    THE  ABOLITION  OP  POVERTY 

assigns  to  the  wage-earner,  by  the  working  of 
free  competition,  that  part  of  the  product  which 
he  has  assisted  in  creating  imputable  to  his 
specific  services,  and  necessarily  large  enough  to 
insure  his  continued  efficiency. 

Since  there  is  nothing  inherent  in  modern 
wage  determination  to  prevent  the  normal  toiler 
from  securing  under  favorable  conditions  an 
economically  sufficient  wage,  his  inability  at 
^  times  to  do  so  must  be  in  consequence  of  rela- 
tively weaker  position  in  industrial  bargaining 
as  compared  with  the  capitalist  employer.  This 
inferiority  ordinarily  results  from  the  mono- 
polistic control  of  the  labor  demand  by  indus- 
trial combination,  or  from  the  incomplete 
substitution  of  collective  for  individual  wage  ad- 
justment by  the  laborers.  To  the  degree  that 
rival  employers  are  brought  into  combination, 
the  level  of  free  competition  in  wage  bargain- 
ing is  obviously  tilted  to  the  disadvantage 
of  the  laborer,  even  though  such  capital  cen- 
tralization may  make  its  management  more 
sensitive  to  the  pressure  of  public  opinion. 
One  of  the  purposes,  entertained  rather  than 
avowed,  of  governmental  check  upon  indus- 
trial  consolidation  has  been  to  restore  a  more 
^  active  competition  for  labor  force  on  the  part 
of  employers.  A  more  practicable  method 
of    restoring    equilibrium    is    the    organization 


THE  RATE  OF  WAGES  53 

of  the  labor-supply  into  a  competitively  equal 
unit. 

The  replacement  of  individual  by  collective 
bargaining  in  wage  adjustment  is  the  prime 
purpose  of  contemporary  trade-unionism.  Such 
was  not  always  the  original  design,  and  to  it 
have  certainly  been  added  other  significant 
activities.  But  collective  bargaining  is  after  all 
the  dominant  concern;  whatever  else  a  labor 
organization  attempts  is  in  reinforcement  of  this 
device. 

The  necessity  for  concerted  action  on  the  part 
of  the  laborer  has  been  recognized  almost  from 
the  beginning  of  sound  thinking  in  the  field  of 
economic  distribution.  Even  before  the  advent 
of  capitalism  and  the  factory  system,  Adam 
Smith  noted  that  "tacit,  but  constant  and  uni- 
form combination"  of  employers,  and  the  con- 
sequent disadvantage  of  unorganized  workmen 
in  wage  disputes.  ^^  With  the  repeal  of  combi- 
nation laws  a  generation  later,  a  narrow  economic 
philosophy  sought  to  justify  the  contemporary 
disadvantage  of  wage-earners  in  industrial  bar- 
gaining by  the  concept  of  a  wage  fund,  with  its 
implication  of  a  rigid  predetermined  rate  of 
wages  that  neither  trade-unions  nor  collective 
action  could  affect.  The  reaction  came,  first, 
in  admission  of  the  actual  achievement  of  trade- 
unionism,   then   in   recognition   of   its   tactical 


54    THE  ABOLITION  OF  POVERTY 

necessity  in  wage  bargaining,  culminating  in 
radical  reconstruction  of  the  theory  of  wages. 
From  the  time  of  Longe  and  Thornton,  "the 
verdict  of  the  economists"  has  been  virtually 
unanimous  in  insisting  that  a  necessary  assump- 
''^tion  of  free  competition  in  wage  contracting  is 
the  organization  of  labor  for  purposes  of  col- 
lective bargaining. ^^  This  has  not  involved 
approval  of  all  the  policies  nor  indorsement  of 
many  of  the  devices  of  modern  trade-unionism. 
But  there  is  essential  agreement  as  to  the  primary 
contention,  that  collective  bargaining  is  neces- 
sary for  the  workman  to  secure  as  wages  at  least 
that  part  of  the  product  of  industry  which  free 
competition  tends  to  award  him. 

This  conclusion  is  in  general  confirmed  by 
existing  wage  standards.  It  is  not  meant  that 
wages  are  invariably  high  in  organized,  and 
invariably  low  in  unorganized,  trades.  As  a 
matter  of  fact,  the  base-line  needed  for  such 
comparison  is  in  itself  highly  irregular.  Among 
the  most  puzzling  facts  in  industrial  relations 
are  the  differences  in  earnings  from  labor.  There 
is  not  enough  in  the  traditional  explanation  of 
the  causes  of  wage  variations  —  abundance  or 
scarcity  of  supply  relative  to  demand,  ease  or 
hardship  of  the  occupation,  cheapness  or  ex- 
pense of  learning  the  business,  constancy  or 
inconstancy  of  employment,  smallness  or  great- 


THE  RATE  OF  WAGES  55 

ness  of  trust  reposed  in  the  workmen,  proba- 
bility or  improbability  of  success  in  the  trade  — 
to  account  for  the  fact  that  locomotive  engineers 
earn  twice  as  much  as  painters,  with  an  appre- 
ciably shorter  working  day,  or  that  hod-carriers 
receive  practically  the  same  wages  as  retail 
clerks.  It  would  be  extravagant,  of  course, 
to  explain  the  relatively  high  wages  received 
by  locomotive  engineers  among  skilled,  and  by 
hod-carriers  among  unskilled,  workmen,  solely 
by  the  effective  trade-unionism  that  obtains 
in  these  crafts.  A  more  complex  relation  of  cause 
and  effect  is  probably  responsible  —  higher 
remuneration  originally  growing  out  of  peculiar 
circumstances  has  made  possible  organization, 
and  organization  has  in  turn  extracted  higher 
remuneration.  This  much  can,  however,  safely 
be  set  forth :  in  those  trades  where  an  efficiently 
organized,  intelligently  directed  trade-unionism 
prevails,  wages  have  either  risen  higher  than 
they  otherwise  would  have  or  have  suffered  less 
reduction  than  would  otherwise  have  occurred. 
It  is  not  only  as  to  rate  of  wages  that  trade- 
unionism  can  serve  as  the  defense  of  the  toiler. 
The  several  elements  which  make  up  the  con- 
ditions of  employment,  and  which  affect  the 
toiler  for  good  or  ill  in  hardly  less  degree  than 
the  rate  of  wages, —  working  hours,  shop  rules, 
apprentice   regulations,  —  can   be   made   more 


56    THE  ABOLITION  OF  POVERTY 

favorable  by  reason  of  labor  organization.  A 
striking  example  of  this  is  the  service  of  trade- 
unionism  in  reducing  the  suffering  which  from 
the  time  of  the  industrial  revolution  has  attended 
the  introduction  of  labor-displacing  machinery 
in  particular  crafts.  This  is  apparent  if  we  com- 
pare the  acute  distress  which  the  introduction 
of  the  power  loom  brought  to  the  old  hand- 
weaving  industry,  an  unorganized  craft,  with 
the  easy  readjustment  which  marked  the  intro- 
duction of  the  linotype  in  the  printing  trade, 
a  highly  organized  craft. ^^  It  is  true  that  con- 
ditions were  unusually  favorable  to  the  work- 
men in  the  case  of  the  linotype,  and  the  recent 
history  of  the  glass-blowing  ^d  stone-cutting 
industries  indicate  that  trade-unionism  cannot 
entirely  avert  the  suffering  incident  to  abrupt 
change  in  industrial  processes,  even  though 
guided  by  more  intelligent  policies  than  actually 
prevailed.  Yet  even  here  and  in  other  industries 
in  which  labor-displacing  machinery  has  been 
introduced,  the  effect  of  trade-unionism  has  been 
at  least  to  prevent  demoralization  and  disaster. 
Trade-unionism  extends  over  but  a  fractional 
part  of  the  industrial  field,  and  even  over  much 
of  the  area  nominally  included,  its  sway  is  loose 
and  ineffective.  Recent  competent  studies  show 
that  the  membership  of  national  unions  affiliated 
with  the  American  Federation  of  Labor  in  191 1 


THE  RATE  OF  WAGES  57 

was  approximately  i,8oo,ckx),  and  that  the  total 
membership  of  the  non-affiliated  national  unions 
in  191 1  did  not  exceed  600,000,  or  2,400,000  in 
all.^^  If  to  this  be  added  100,000  to  allow  for 
the  membership  of  non-affiliated  local  unions  and 
of  other  national  federations, —  such,  for  ex- 
ample, as  the  10,000  membership  of  the  Indus- 
trial Workers  of  the  World, —  it  would  appear 
that  the  organized  labor  force  of  the  United 
States  does  not  exceed  2,500,000.  There  are, 
however,  a  considerable  body  of  laborers  who 
have  at  one  time  or  another  been  connected  with 
such  organizations  and  who  may  be  regarded  as 
still  affected  by  the  spirit  and  sentiment  of  trade- 
unionism.  Assuming,  by  a  very  liberal  estimate, 
that  this  latter  class  aggregates  1,000,000  per- 
sons, it  would  appear  that  the  total  number  of 
wage-earners  in  the  United  States,  organized 
to  some  extent  for  purposes  of  collective  bar- 
gaining, or  affected  in  some  degree  by  the  spirit 
of  unionism,  is  less  than  3,500,000. 

The  census  of  1900  returned  the  number  of 
persons  in  the  United  States,  of  ten  years  of  age 
and  upward,  engaged  in  gainful  occupations  as 
somewhat  more  than  29,000,000.  Of  these  ap- 
proximately 10,000,000  were  industrial  wage- 
earners,  while  more  than  5,000,000  additional 
(farm  laborers,  salaried  employees,  selling  force, 
and   domestic   servants)    were   maintained   by 


58    THE  ABOLITION  OF  POVERTY 

some  manner  of  contractual  wages.*°  If  we  con- 
fine our  attention,  however,  to  the  10,000 ,0CXD 
industrial  wage-earners,  and  assume —  the  actual 
enumeration  for  19 10  not  yet  having  been 
made  available  —  that  the  number  of  persons 
so  engaged  increased  between  1900  and  19 10  in 
the  same  proportion  as  the  total  population  of 
the  United  States,  the  corresponding  aggre- 
gate for  1 9 10  would  probably  be  more  than 
12,000,000.  It  thus  appears  that  probably  less 
than  one  third  of  the  industrial  wage-earners 
of  the  United  States  are  organized  in  form  or 
in  spirit  for  purposes  of  collective  bargaining. 
The  remaining  two  thirds  receive  compensa- 
tion for  their  services  upon  the  basis  of  indi- 
vidual bargaining,  ordinarily  under  terms  of 
disadvantageous  inequality  on  the  part  of  the 
employee.  If  regard  be  had  to  the  entire  body 
in  receipt  of  wages,  the  percentage  of  organi- 
zation is  probably  not  greater  than  one  fifth. 

Under  such  conditions  the  wages  of  most 
workers  are  maintained  above,  or  even  at  the 
level  of,  economic  sufficiency  only  by  the  com- 
petition of  employers  and  the  relative  scarcity 
of  labor.  To  the  extent  that  employers  act  in 
concert,  tacit  or  avowed,  or  that  the  labor-supply 
is  congested  locally  or  industrially,  or  that  an 
industrial  class  have  degenerated  into  parasitic 
dependence,  the  share  of  the  wage-earner  sinks 


THE  RATE  OF  WAGES  59 

to  the  poverty  line.  For  the  great  body  of  those 
in  receipt  of  wages,  an  effectively  organized, 
intelligently  administered  trade-unionism  offers 
the  surest  remedy  against  capitalistic  exploi- 
tation and  social  parasitism.  In  so  far  as  this 
protection  does  not  exist,  the  toiler  is  exposed 
to  oppression  by  the  enterpriser,  on  the  one  hand, 
and  to  spoliation  by  society,  on  the  other. 

It  is  sometimes  asserted  that  the  economic 
advantage  of  trade-unionism  to  the  wage-earner 
is  apparent  rather  than  actual,  and  that  his 
real,  in  contradistinction  to  his  nominal,  wages 
are  reduced  rather  than  augmented  by  collec- 
tive bargaining.  This  may  happen,  conceivably, 
in  two  ways.  The  total  product  of  industry  may 
be  so  reduced  by  the  interference  and  restraint 
imposed  upon  capitalistic  enterprise  by  labor 
organization  that  the  wage-earner's  quota,  al- 
though the  same  or  even  larger  relatively,  will 
be  less  absolutely.  Or  the  burden  of  such  wage 
increases  as  trade-unions  succeed  in  wresting 
from  the  employer  may  be  ultimately  shifted 
to  the  consumer  —  in  consequence  of  higher 
prices  —  with  the  result  that  the  laborer  as  a 
consumer  loses  all  and  more  of  the  benefit  that 
he  has  acquired  as  producer.  Thus,  it  has  been 
recently  stated,  "Probably,  when  the  question 
is  put,  what  is  the  cause  of  the  recent  high  prices, 
no  answer  is  so  frequently  in  the  mouth  of  the 


6o    THE  ABOLITION  OF  POVERTY 

non-scientific  man  as  'organized  labor.'  "  *i 
Indeed,  this  contention  is  heard  in  higher  places. 
One  of  the  most  eminent  of  American  economists 
has  within  the  year  made  the  startling  asser- 
tion: "There  is  no  question  whatever  in  my 
mind  that  the  rise  of  prices  of  almost  all  articles 
of  general  consumption  during  the  last  decade 
or  two  has  been  due,  as  much  as  to  any  one  thing 
else,  to  the  rise  in  money  wages  paid  for  the 
same  or,  even  less."  ^^ 

As  to  restrictive  effect  upon  production,  it  is 
certain  that  the  policies  of  some  unions  and  the 
practices  of  others  —  limitation  of  output, 
"making-of-work,"  regulation  of  apprentices  — 
go  beyond  the  limits  of  mere  protection  against 
exploitation  and  parasitism,  and  tend  to  reduce 
the  national  dividend  without  corresponding 
social  advantage.  It  may  be  proper  to  restrict 
the  speeding-up  of  industrial  processes  by  regu- 
lating the  use  of  exceptional  workers  as  pace- 
setters, or  to  check  the  influx  of  boy-labor  into 
"blind-alley"  occupations  by  apprentice  regu- 
lations. But  there  is  no  such  justification,  for 
example,  for  the  long-established  practice  of 
the  printers  that  plate  matter  must  be  reset,^^ 
or  for  the  practice  of  strong  local  unions  in  cer- 
tain trades  of  monopolizing  employment  by  im- 
posing a  prohibitive  initiation  fee  upon  appli- 
cants for  union  membership.^^   As  a  matter  of 


THE  RATE  OF  WAGES  6i 

fact,  such  procedure  represents  the  excesses  of 
trade-unionism,  not  its  essence.  Public  senti- 
ment, expert  opinion,  even  labor  leadership  are 
in  opposition  to  short-sighted,  economically 
fallacious  deference  to  *'the  short  run,"  and  the 
drift  of  trade-unionism  is  away  therefrom.  If, 
however,  going  beyond  this,  trade-unionism  is 
denounced  because  of  its  mere  interference  with 
individual  enterprise  and  "freedom  of  contract," 
we  are  brought  face  to  face  with  the  old  confu- 
sion between  the  creation  of  weal  and  the  pro- 
duction of  wealth.  It  is  more  than  likely  that 
a  complete  status  of  individual  bargaining,  just 
as  entire  immunity  from  legal  regulation  as  to 
working  conditions,  would  result  for  the  time 
being  in  physically  larger  product.  But  all  in- 
dustrial experience  suggests  that  with  such  in- 
crease would  go  reduced  well-being  now  and 
grave  social  injury  thereafter. 
j  As  to  the  contention  that  trade-unionism 
augments  prices  by  increasing  the  expenses  of 
production,  the  argument  is  in  the  main  hypo- 
thetical. No  such  result  will  certainly  attend 
if  profits  in  the  industry  affected  have  been 
relatively  high,  or  if  increased  wages  are  fol- 
lowed by  heightened  efficiency.  Only  in  the 
event  of  actually  increased  labor  cost  being 
shifted  to  the  consumer,  through  the  channels  of 
sub-normal   profits   and   curtailed   production, 


62    THE  ABOLITION  OF  POVERTY 

will  the  incidence  of  the  increased  wages  be  borne 
by  the  consumer.  Even  then  it  remains  to  be 
determined  whether  higher  prices  and  partial 
dislocation  counteract  the  advantage  of  higher 
remuneration.  The  one  attempt  at  a  statistical 
determination  of  this  complex  problem  reaches 
the  cautiously  guarded  conclusion  that  "There 
seems  to  have  been  no  great  difference  in  price 
movements  as  between  weakly  organized  and 
relatively  strongly  organized  industries,  while 
the  greatest  advances  have  come  in  industries 
A  which  are  practically  unorganized."  ^^ 
^■*^^he  slow  spread  of  trade-unionism  is  due  in 
part  to  the  inertia  of  workmen,  in  part  to 
the  resistance  of  employers,  in  part  to  the 
use  of  unsound  policies  by  the  unions  them- 
selves. Effective  organization  calls  for  restraint, 
sacrifice,  and  leadership,  and  these  are  slowly 
acquired  characteristics  of  the  labor  world.  The 
most  competent  students  of  trade-unionism 
have  likened  it  to  "industrial  democracy,"  and 
the  simile  is  justified  at  least  in  the  gradual 
evolution  of  structure  and  function. 

The  organization  of  labor  has  been  further 
impeded  by  the  hostility  of  employers  to  col- 
lective action  on  the  part  of  their  work-people. 
It  has  been  necessary  to  fight  step  by  step  for 
recognition,  and  even  now  the  employers'  assent 
is  ordinarily  enforced  and  grudging.   Traceable 


THE  RATE  OF  WAGES  63 

to  the  historical  conditions  under  which  indus- 
trial contract  has  developed,  this  deep-seated 
resentment  long  showed  itself  in  hostile  law  and 
in  unfriendly  judicial  interpretation  no  less  than 
in  outright  resistance.  More  recently,  in  lieu 
of  an  unqualified  hostility  to  collective  bargain- 
ing as  such,  this  resistance  appears  in  bitter 
opposition  to  specific  trade-union  policies  deemed 
indispensable  to  effective  action  by  the  unions 
themselves. 

But  most  of  all,  the  extension  of  trade- 
unionism  has  been  checked  by  its  own  mistaken 
practices  and  tactical  blunders.  Immaturity 
in  development  has  permitted  crude  abuses, 
such  as  arrogant  leadership  and  jurisdictional 
disputes.  Over-emphasis  upon  immediate  result 
has  encouraged  economically  unsound  policies, 
such  as  restriction  of  output,  making  of  work, 
and  limitation  of  apprentices.  Neglect  of  larger 
consequences  has  countenanced  anti-social  modes 
of  enforcement,  such  as  sympathetic  boycotts 
and  physical  violence. 

In  all  of  these  directions,  however,  the  vista 
is  encouraging.  The  labor  world  is  awakening 
to  wider  and  deeper  consciousness  that  what- 
ever the  future  may  offer  through  radical  eco- 
nomic reconstruction,  the  immediate  improve- 
ment is  to  be  achieved  by  organization  and  col- 
lective action.  The  employing  world  and  public 


64    THE  ABOLITION  OF  POVERTY 

opinion  in  general  have  grown  to  realize  that 
trade-unionism  is  not  necessarily  what  trade- 
unionists  sometimes  do,  and  that  the  organiza- 
tion of  labor  is  in  essence  only  the  attempt  to 
place  the  two  parties  to  industrial  contract  upon 
a  plane  of  bargaining  equality.  Finally,  out  of 
repeated  trial  and  hard  experience  has  come 
greater  wisdom  to  the  unions.  New  types  of 
labor  leadership  are  being  evolved,  short-sighted 
policies  are  becoming  discredited,  and  a  sounder 
and  wiser  unionism  is  in  sight. 


CHAPTER  V 

THE   UNDERPAID 

Trade-unionism,  however  widely  extended 
and  efficiently  organized,  cannot  avert  poverty 
from  three  classes  of  the  community:  (i)  from 
those  who  by  reason  of  certain  distinctive  con- 
ditions of  work  and  workers  tend  to  remain  in- 
sufficiently paid ;  (2)  from  those  who  are  desirous 
of  working  but  are  periodically  unable  to  obtain 
employment;  and  (3)  from  those  who  through 
physical  infirmity  or  disability  find  it  impossible 
to  secure  adequate  employment  at  all.  These 
categories  may  be  distinguished  as  (a)  the  under- 
paid, (b)  the  unemployed,  (c)  the  unemploy- 
able. The  abolition  of  poverty  involves  the  as- 
surance of  economic  sufficiency  to  the  members 
of  these  several  classes. 

The  inability  of  trade-unionism  to  remedy 
the  under-payment  of  specific  groups  of  wage- 
earners  results  either  from  the  unorganizability 
of  such  groups  or  from  the  social  undervaluation 
of  their  industrial  product.  A  body  of  laborers 
is  unorganizable  when  the  elements  that  com- 
pose it  cannot,  under  existing  conditions  and 
for  any  considerable  time,  be  assembled  into  a 


66    THE  ABOLITION  OF  POVERTY 

dirigible  force  capable  of  determining  or  at  least 
influencing  the  conditions  of  employment  by 
the  use  of  collective  bargaining  and  its  attend- 
ant devices.^^  This  disability  may  be  due  to 
the  low  mentality  or  the  volatile  temperament 
of  the  laborers,  as  in  the  case  of  the  longshore- 
men. It  may  result  from  the  continuing  influx 
of  immigrant  labor,  as  in  the  case  of  "extra 
gangs"  of  railroad  track  laborers.  It  may  be  in 
consequence  of  the  "assisted"  quality  of  the 
industry  itself,  as  in  the  case  of  less  skilled  needle 
trades.  In  each  such  instance,  the  wage  contract 
becomes  the  result  of  individual  bargaining 
wherein  weak  and  detached  labor  units  are  pitted 
against  relatively  strong  and  solidified  employers. 
Nominally  contracting  under  free  competition, 
the  one  party  enters  the  contest  insuperably 
handicapped,  so  that  only  by  industrial  acci- 
dent —  a  local  or  temporary  scarcity  of  work- 
men, an  abrupt  increase  in  employment  demand 
—  will  the  rate  of  wages  actually  paid  corre- 
spond to  a  normal  distributive  share.  There  is 
no  assignable  lower  limit  to  the  level  of  wages 
under  such  conditions,  other  than  the  despera- 
tion of  half-starved  bodies. 

It  does  not  follow  that  a  class  of  workmen 
now  unorganizable  are  bound  to  remain  so.  In- 
deed, quite  apart  from  influences  from  without, 
one  of  the  most  notable  results  of  that  form  of 


THE  UNDERPAID  67 

intervention  here  proposed  has  been  to  ener- 
gize masses  of  sodden,  passive  workers  into  con- 
sciously self-helping  groups.  It  is  nevertheless 
true,  however,  that  there  exist  great  bodies  of 
toilers  who,  at  the  particular  time  and  place, 
are  incapable  of  being  organized  for  collective 
bargaining. 

It  is  possible,  moreover,  even  when  a  parti- 
cular group  of  laborers  are  so  well  organized  as 
to  meet  their  employers  upon  a  fair  competitive 
level  and  thus  prevent  excessive  profits,  that  the 
rate  of  wages  which  collective  bargaining  is  able 
to  secure  for  any  considerable  time  is  less  than 
the  amount  sufficient  to  maintain  a  wholesome 
existence.  This  is  because  the  valuation  placed 
by  society  upon  the  marginal  unit  of  product 
is  less  than  enough  to  permit  the  payment  of  a 
sufficient  wage  after  the  deduction  of  the  pre- 
vailing rate  of  industrial  profits.  Under  such 
conditions  of  relatively  excessive  production, 
any  attempt  on  the  part  of  the  particular  work- 
men affected  to  raise  their  wages  to  the  level 
of  necessary  income  is  attended  with  almost 
insuperable  difficulty. 

There  is  no  social  justification  for  underpaying 
industries.  The  workers  in  such  a  trade  are  part- 
supported  either  by  their  families,  and  so  indi- 
rectly by  the  better-paying  industries,  or  by 
society  as  a  whole  in  the  form  of  community 


> 


68    THE  ABOLITION  OF  POVERTY 

charges  entailed  by  the  physical  and  moral  de- 
terioration of  the  underpaid.  These  industries 
are  properly  described  as  parasitic.  They  afford 
a  limited  class  of  consumers  an  unfair  advan- 
tage over  the  general  community  with  attend- 
ant misery  and  wretchedness  to  the  wage-earners 
involved.  It  is  as  economically  unsound  for  a 
body  of  toilers  to  be  exploited  in  behalf  of  a 

)  group  of  consumers  as  in  the  interest  of  a  mono- 

'  poly-intrenched  employer. 

In  both  circumstances,  —  that  is,  where  col- 
lective bargaining  cannot  be  utilized  and  where 
social  revaluation  of  the  particular  product  is 
needed  —  a  sufficient  wage  can  best  be  assured 
>the  laborer  by  state  intervention  defining  mini- 
mum wage  conditions.  This  is  the  assertion  of  no 
new  principle.  From  the  beginning  of  modern 
factory  legislation,  the  state  has  time  and  again 
intervened  to  establish  a  competitive  base-line 
in  industrial  enterprise  whenever  it  has  become 
clear  that  free  contract  fails  to  insure  conditions 
of  employment  compatible  with  the  social  in- 
terest. In  this  manner,  the  length  of  the  work- 
ing day,  the  employment  of  women  and  children, 
^  the  safeguarding  of  dangerous  processes,  have 
heretofore  been  defined  as  to  least  favorable 
terms  by  legal  enactment.  The  motive  of  such 
legislation  has  been  to  replace,  by  exercise  of 
the  state's  police  power,  that  minimum  well- 


THE  UNDERPAID  69 

being  which  the  wage-earner  cannot  secure  for 
himself  and  which  it  is  essential  for  the  safe- 
guarding of  society,  that  he  should  enjoy.  The 
same  intervention  is  now  invoked  to  establish 
as  a  minimum  wage  —  for  less  than  which  it 
shall  not  be  lawful  for  employers  to  contract  or 
laborers  to  engage  —  an  amount  not  less  than  ^ 
the  necessary  cost  of  maintaining  the  worker's 
family  in  health  and  decency. 

The  immediate  effect  of  such  a  legally  imposed 
minimum  wage  is  the  relief  of  a  large  class  of  >. 
underpaid  wage-earners  otherwise  exposed  to 
poverty.  Nor  are  the  collateral  consequences 
alarming  in  so  far  as  disclosed  by  positive  evi- 
dence or  determinable  by  theoretical  analysis. 
The  payment  of  a  sufficient  wage  may  lead  to 
heightened  efficiency  on  the  part  of  the  worker, 
or  to  more  economical  methods  of  production 
on  the  part  of  the  enterpriser,  in  which  event 
the  gain  has  been  effected  without  any  loss 
whatever.  If  profits  have  been  abnormally  high 
in  the  industries  or  establishments  affected,  the  ^  ^ 
burden  of  increased  wage  payment  will  rest  upon 
the  employer  —  a  transfer  highly  desirable  in 
itself.  Finally,  if  the  industry  be  parasitic,  in 
the  sense  that  a  low  price  to  the  consumer  is 
made  possible  by  underpayment  of  labor,  the 
proposed  enactment  will  effect  a  social  revalua- 
tion of  the  product  through  the  successive  stages 


70    THE  ABOLITION  OF  POVERTY 

of  reduced  profits,  curtailed  industry,  and  dimin- 
ished output. 

The  menace  of  discharged  labor  is  often  referred 
to  in  minimum  wage  discussion.   An  economist 
of  distinction  has  lately  declared  that  such  a 
/O   policy  *'will   merely  render  entirely  idle,   and 
(J\^  throw  entirely  on  the  Poor  Law  or  on  friends  and 
relations,  a  number  of   persons  who  formerly 
were  —  or  at  all  events  ought  to  have  been  — 
partially  supported  from  those  sources,  while 
they  at  the  same  time  did  a  certain  amount  of 
productive  work."  ^^   Such  argument,  in  so  far 
as  it  implies  anything  more  than  the  temporary 
dislocation  due  to  industrial  change,  must  as- 
sume the  existence  of  a  fund  of  unemployed  from 
which  the  vacated  places  are  to  be  filled,  or 
the  possible  replacement  of  the  displaced  labor 
by  the  introduction  of  machinery  or  more  eco- 
nomical methods  of  production,  or  the  actual 
curtailment  of  production.   Of  these  possibilities 
the  third  may  be  dismissed  as  conceivable  only 
in  the  event  of  production  having  been  exces- 
sive or  parasitic  —  in  either  of  which  cases  re- 
striction is  desirable.    As  to  the  first  two  con- 
tingencies,—  replacement  of  unemployed  labor 
by  machinery  or  by  more  efficient  organization, 
—  such  changes  are  obviously  in  the  interest 
of  society  in  general  as  replacing  less  by  more 
economical  methods  of  production.    It  is  de- 


THE  UNDERPAID  71 

sirable  that  the  distress  of  dislocation  be  mini- 
mized and  that  provision  be  made  for  those 
injuriously  affected;  but  the  cautious  extension 
of  minimum  wage  legislation,  combined  with 
intelligent  appreciation  of  the  complex  elements  ^ 
involved,  may  reasonably  be  expected  to  attain 
such  results. 

The  worthy  inefficient  and  the  deserving  in- 
competent, whose  prominence  in  minimum  wage 
discussion  is  comparable  to  the  r61e  of  the  widow 
and  orphan  in  fiscal  debate,  will  be  cared  for 
by  exceptional  provision.  Just  as  those  trade- 
unions  which  insist  most  strongly  upon  a  stand- 
ard wage  rate  permit  members  who  have  be- 
come unable  to  command  the  minimum  rate  to 
work  for  what  they  can  get,^^  so  properly  drafted 
minimum  wage  legislation  authorizes  licensed 
exemption.  A  typical  provision  is  that  of  the 
bill  submitted  to,  but  unfortunately  not  enacted 
by,  the  General  Assembly  of  the  state  of  Mary- 
land in  1914:  "The  [Minimum  Wage]  Commis- 
sion shall  make  rules  and  regulations  whereby 
any  female  or  minor  unable  or  unwilling  to  fairly 
earn  the  minimum  wage  determined  on  shall 
be  granted  a  license  to  work  for  a  wage  which 
shall  be  commensurate  with  his  or  her  ability 
or  appropriate  to  his  or  her  circumstances  and 
surroundings.  Each  license  so  granted  shall 
establish  a  wage  for  such  licensee,  and  no  licensee 


72    THE  ABOLITION  OF  POVERTY 

shall  be  employed  at  a  wage  less  than  the  rate 
so  established."  ^* 

A  statutory  minimum  wage  notably  higher 
than  that  justified  by  the  productive  power  of 
the  ordinary  worker  might  —  assuming  no  ex- 
ploitation on  the  part  of  employers  —  lead  to 
a  considerable  discharge  of  labor.  Professor 
John  B.  Clark  has  deemed  this  likelihood  suffi- 
ciently great  to  make  necessary  the  association 
with  minimum  wage  legislation  of  some  scheme 
of  public  emergency  employment. '^^  Such  an 
undertaking  presents  grave  additional  problems 
hardly  justified  by  the  circumstance  that  "It 
could  be  made  to  afford  a  certain  practical  test 
of  the  capabilities  of  socialism,  and  would  at 
least  be  a  better  object-lesson  than  is  elsewhere 
afforded."  As  a  matter  of  fact,  this  fear  is  based 
entirely  upon  a  recklessly  fixed  statutory  mini- 
mum. As  Professor  Clark  himself  admits,  "If 
the  law  itself  prescribes  no  minimum,  but  creates 
a  commission  with  power  to  prescribe  it  for  each 
particular  occupation,  there  is  ground  for  think- 
ing that  this  commission  may  proceed  in  such 
a  conservative  way  that  its  action  will  displace 
relatively  few  persons." 

No  less  familiar,  although  far  more  superficial, 
is  the  opinion  that  the  establishment  of  a  mini- 
mum wage  would  operate  to  make  in  practice 
^  the  minimum  also  the  maximum.   There  is  no 


THE  UNDERPAID  73 

warrant  for  this  fear  either  in  fact  or  in  theory. 
The  experience  of  minimum  wage  legislation 
in  Australia  and  in  England  shows  conclusively 
that,  in  industry  after  industry  where  the  mini- 
mum wage  has  been  set  by  law,  the  wages  actu- 
ally paid  tend  to  exceed  this  least  requirement. 
The  obvious  explanation  consists  in  the  fact 
that  the  remuneration  for  labor  is  composite, 
consisting  in  part  of  the  minimum  defined  by 
competition  or  by  law  and  of  a  differential  excess 
added  thereto,  equivalent  to  the  superior  skill 
of  the  particular  workmen.  The  effect  of  mini- 
mum wage  legislation  is  to  raise  the  first  con- 
stituent without  in  any  wise  interfering  with  the 
second.  Individual  workmen  will  continue  to 
receive  wages  higher  than  the  least  well-paid 
workmen  to  the  amount  of  their  superior  effi- 
ciency. The  essential  change  consists  in  the 
elevation  of  the  wages  of  the  least  well  paid. 

The  use  of  a  statutory  minimum  wage  to  pre- 
vent the  social  injury  growing  out  of  insufficient 
wage  payment  is  being  urged  with  increasing 
confidence  by  social  reformers  in  the  present 
decade.  In  Australia,  New  Zealand,  Great  Bri- 
tain, and  in  various  Commonwealths  of  the 
United  States  practical  test  has  been  or  is  being 
made  of  the  device  in  one  form  or  another.  The 
results  are  neither  so  extensive  nor  so  prolonged 
as  to  be  conclusive.   But  they  are  withal  signi- 


74    THE  ABOLITION  OF  POVERTY 

ficant  both  in  dispelling  reasonable  doubts  as 
to  some  particulars  and  in  confirming  antici- 
pated advantages  as  to  others. 

The  experiences  of  Australia  and  New  Zea- 
land were  deemed  sufficiently  encouraging,  in 
the  light  of  expert  report  and  rigid  analysis,  to 
warrant  the  adoption  of  the  principle  in  Eng- 
land, where  the  Trade  Boards  Act  of  1909  pro- 
vided the  machinery  for  establishing  a  mini- 
mum wage  in  four  typical  trades.  The  act  came 
into  operation  on  January  I,  1910,  but  more 
than  a  year  elapsed  before  the  first  rate  affecting 
a  single  trade  was  made  obligatory  and  rates 
affecting  the  other  trades  became  effective  much 
later.  The  Board  of  Trade  still  deems  it  pre- 
mature (June,  191 3)  to  set  forth  the  ultimate 
effects  of  the  act  on  the  trades  to  which  it  has 
been  applied.  ^^  But  the  results  have  justified 
extending  the  application  of  the  act  to  other 
trades  by  the  Provisional  Order  Bill  introduced 
on  May  i,  1913,  thereby  bringing  between  150,- 
OCX)  and  200,000  additional  persons  under  its 
provisions,  and  approximately  doubling  the  num- 
ber of  persons  affected  by  the  act.^^  Although 
official  reserve  may  check  a  formal  verdict,  the 
opinion  of  expert  observers  is  available.  One 
of  the  most  competent  of  these  has  summarized 
the  effect  of  the  act  upon  the  first  of  the  indus- 
tries affected, —  chain-making  at  Cradley  Heath, 


THE  UNDERPAID  75 

—  **  the  protagonist  of  half  a  dozen  inquiries 
and  where  all  the  evils  associated  with  the  ab- 
sence of  any  standard  wage,  the  beating  down 
of  rates  by  employers,  unendurably  long  hours 
of  labour,  the  constant  indebtedness  of  the 
workers  to  the  middlemen,  have  in  the  past  been 
rampant."  Since  February,  191 1,  when  the  new 
rates  were  made  obligatory  by  the  Board  of 
Trade,  these  things  have  happened:  ^^  "In  the 
first  place,  the  piece  prices  paid  for  the  poorest 
qualities  of  chain  were  raised  from  40  to  80  per 
cent,  and  the  workers'  hourly  earnings  were  in- 
creased in  proportion.  In  the  second  place,  the 
hours  worked  are  shorter,  for  it  is  no  longer 
necessary  to  work  70-80  hours  in  order  to  make 
a  living.  In  the  third  place,  the  quality  of  the 
chain  made  has  improved,  for  the  speed  of  work- 
ing, though  extraordinary,  need  no  longer  be 
so  frantic  as  it  was.  In  the  fourth  place,  the 
whole  standard  of  life  in  the  district  has  been 
raised.  The  workers  are  better  nourished  and 
better  dressed ;  shopkeepers  state  that  their  sale 
of  provisions  has  increased ;  employers  that  *  the 
workers  take  more  pride  in  themselves  and  show 
more  care  in  their  work';  insurance  agents  that 
arrears  are  less;  school  teachers  that  the  school 
children  are  'better  fed,  better  clothed,  and 
better  shod.'  Trade-unionism,  once  almost  hope- 
less, has  grown  apace,  and  the  workers'  repre- 


76    THE  ABOLITION  OF  POVERTY 

sentatives  on  the  Board  have  now  asked  for,  and 
are  likely  to  obtain,  another  lO  per  cent.  And 
this  has  been  accomplished  without,  as  yet, 
creating  unemployment,  and  at  the  cost  of  a 
rise  in  the  price  of  chain  which  is  far  less  than 
the  rise  in  the  price  paid  the  worker,  and  is  only 
in  part  due  to  the  advance  in  the  latter." 

In  the  United  States  the  enactment  of  mini- 
mum wage  legislation  has  been  even  more  recent 
—  so  recent,  indeed,  as  to  preclude  even  a  trial 
exhibit  as  to  results.  The  earliest  act  (Massa- 
chusetts) became  operative  on  July  I,  1 91 3,  and 
the  first  actual  determination  of  a  wage  rate 
(Oregon)  took  effect  in  November,  191 3.  Fol- 
lowing the  example  of  Massachusetts,  in  191 2, 
eight  additional  States  adopted  the  system  in 
some  form  or  other  in  19 13  and  two  more  made 
provision  for  commissions  of  inquiry.  Intense 
interest  in  the  device  has  manifested  itself  in 
other  progressive  Commonwealths,  and  it  is 
more  than  likely  that  1914-15  will  witness  other 
States  enacting  such  legislation.^^ 

Some  part  of  this  activity  is  traceable  to  the 
sensational  advocacy  of  a  statutory  minimum 
as  a  corrective  of  sexual  immorality.  The  con- 
sensus of  qualified  opinion  is  that  there  is  no 
such  direct  and  immediate  relation  between  low 
wages  and  vice  as  to  admit  of  this  easy  rule-of- 
thumb  solution.    The  actual  process  is  a  long 


THE  UNDERPAID  77 

descent,  fairly  summed  up  in  the  phrase,  **  When 
wages  are  too  low  to  supply  nourishment  and 
other  human  needs,  temptation  is  more  readily 
yielded  to."^^  Rid  of  the  incubus  of  cheap  sen- 
sationalism and  flimsy  logic,  minimum  wage 
legislation  is  again  urged  on  its  real  ground  of 
economic  expediency. 

The  usual  form  of  such  legislation  has  been, 
following  the  English  Act,  to  authorize  a  com- 
mission vested  with  powers  to  investigate,  deter- 
mine, and  fix  minimum  wages  for  women  and 
minors  in  all  occupations  and  industries,  either 
directly  or  upon  the  findings  of  a  ''wage  board" 
constituted  for  each  specific  inquiry.  In  but 
one  State  [Utah]  is  a  minimum  prescribed  by 
statute.  Elsewhere  it  has  been  recognized  that 
the  intricacy  of  industrial  processes  and  the 
variety  of  local  conditions  make  administrative 
determination  far  preferable  to  legislative  pre- 
scription. 

The  gravest  difficulty  which  minimum  wage 
legislation  faces  in  the  United  States  is  the  atti- 
tude of  the  courts  as  to  the  constitutionality  ^ 
of  legal  regulation  of  wages  of  workers  in  pri- 
vate employment.  The  prevailing  theory  has 
been  that  women  and  minors  are  in  greater  dan- 
ger of  industrial  exploitation,  and  that  the  law 
may  impose  such  restrictions  upon  the  contracts 
into  which  they  enter  as  are  deemed  necessary 


78    THE  ABOLITION  OF  POVERTY 

or  wholesome.  In  the  case  of  men,  however, 
there  has  been  a  singular  perversion  of  the  his- 
torical purpose  and  the  essential  meaning  of 
/^  the  guaranty  that  no  man  shall  be  deprived  of 
fv  his  life,  liberty,  or  property  without  due  process 
of  law, —  with  the  result  that  it  has  been  neces- 
sary for  a  judge  of  the  United  States  Supreme 
Court  to  insist  that  "The  14th  Amendment  does 
not  enact  Mr.  Herbert  Spencer's  'Social  Stat- 
ics'." ^e 

A  more  intelligent  appreciation  of  the  eco- 
nomic necessity  for  legal  wage  regulation  of  male 
workers  under  certain  conditions  is  bound  to 
result  in  a  revision  of  this  interpretation.  Once 
clearly  understood, —  that  the  underpayment 
r^of  particular  classes  is  inevitable  under  competi- 
tive industry,  and  that  this  carries  with  it  per- 
manent social  injury, —  authority  will  be  found, 
in  the  ordinary  police  power  of  the  State  to 
incorporate  wage  legislation  with  the  general 
body  of  enactments  defining  mimimum  condi- 
tions of  employment.  In  short,  "the  princi- 
ples of  laissez-fairCj  having  been  read  into  the 
Constitution,  can  be  read  out  again."  ^^ 


CHAPTER  VI 

THE   UNEMPLOYED 

The  recurring  inability  of  competent  work- 
men to  find  employment  is  a  cruel  incident  of 
modern  industrial  life.  To  be  able  and  eager  to 
work,  and  to  be  unable  to  secure  a  job,  to  rear 
a  family  in  respectability  and  to  see  comfort, 
self-support,  even  decency  slip  away  through 
no  assignable  fault,  has  been  denounced  again 
and  again  as  social  injustice.''^  More,  perhaps, 
than  any  other  single  cause,  involuntary  idleness 
is  responsible  for  the  economic  injury  and  mental 
bitterness  of  self-respecting  toilers. 

That  there  is  in  every  modern  industrial  com- 
munity such  an  "army  of  the  unemployed"  is 
the  familiar  experience  of  all  students  of  social 
conditions.  But  for  no  other  vital  phase  of  eco- 
nomic maladjustment  is  statistical  information 
less  adequate  or  trustworthy.  Indeed,  it  has 
been  acutely  observed  by  a  careful  investigator^^ 
that,  although  the  first  question  asked  with 
regard  to  the  unemployed  is  generally  as  to 
their  number,  yet  as  a  matter  of  fact  this  is  about 
the  last  question  to  which  any  scientific  answer 
can  be  given,  and  that  so  limited  are  the  sources 


8o    THE  ABOLITION  OF  POVERTY 

of  information  that,  even  when  supplemented 
by  all  available  collateral  material,  the  analysis 
must  of  necessity  be  not  of  the  numbers  unem- 
ployed, but  of  the  causes  of  unemployment  and 
of  their  essential  or  accidental  quality. 

Census  inquiries  as  to  unemployment  have 
been  attempted  in  the  United  States,  Germany, 
and  France;  but  the  results  have  been  insuffi- 
cient and  defective.  For  Great  Britain  we  have 
been  dependent  up  to  191 2  upon  the  returns 
made  by  certain  trade-unions  paying  unemploy- 
ment benefits  and  upon  the  records  of  "distress 
committees"  as  to  the  number  of  applicants  for 
relief.  For  the  United  States,  only  two  Com- 
monwealths—  Massachusetts  and  New  York  — 
have  made  any  systematic  attempt  to  supply 
information  as  to  unemployment,  and  in  each 
case  the  inquiry  is  fragmentary.  In  both  States, 
the  source  of  information  is  the  return  made  to 
the  Bureau  of  Labor  by  certain  trade-unions 
within  the  State  as  to  the  number  of  their  members 
out  of  work  at  the  given  date.  In  Massachusetts 
the  membership  from  which  such  returns  were 
received  for  the  last  quarter  of  1912  formed 
73.6  per  cent  of  the  aggregate  membership  of 
all  local  labor  organizations,  but  only  29.8  per 
cent  of  the  number  of  wage-earners  in  manu- 
facturing industries  in  the  State  (1909).^''  In 
New  York  returns  were  received  in  19 12  from 


THE  UNEMPLOYED  8i 

183  selected  unions,  comprising  about  21  per 
cent  of  the  total  union  membership,  but  prob- 
ably not  more  than  10  per  cent  of  the  number 
of  industrial  wage-earners  in  the  State.  ^^  In 
Massachusetts  the  average  percentages  of  un- 
employment owing  to  lack  of  work  or  material, 
for  the  five  years  1908-12,  were  respectively, 
12.1,  5.6,  5.5,  54,  and  4.5,  the  average  for  1912 
being  the  lowest  recorded  during  the  period. 
In  New  York  the  mean  percentages  of  idleness 
for  causes  other  than  labor  disputes  and  per- 
sonal disability,  for  the  five  years  1908-12,  were 
respectively  22.9,  ii.o,  13.0,  15. i,  12.2. 

Confirmation  of  the  inferences  to  be  drawn 
from  census  enumerations  and  related  inquiries 
as  to  the  extent  and  nature  of  unemployment 
is  found  in  the  intensive  study  made  by  Rown- 
tree  and  Lasker  of  conditions  in  the  city  of  York, 
England,  on  a  given  day  (June  7,  19 10).  Defin- 
ing as  unemployed  a  person  **  who  is  seeking  work 
for  wages,  but  unable  to  find  any  suited  to  his 
capacities  and  under  conditions  which  are  rea- 
sonable, judged  by  local  standards,"  it  was  found 
that  in  this  town  of  82,000  inhabitants  there 
were  on  the  day  in  question  1278  unemployed 
persons,  of  whom  about  one  half  were  not  in 
any  way  disqualified  for  work.^^ 

Making  reasonable  use  of  all  available  mate- 
rials it  appears  that  a  definite  quota,  varying 


82    THE  ABOLITION  OF  POVERTY 

from  two  to  ten  per  cent  of  the  working  force  of 
every  industrial  community,  are  doomed  at  any 
given  time  to  involuntary  idleness.  A  condi- 
tion such  as  this  can  be  fairly  described,  in  the 
terms  of  one  of  its  most  careful  students,  as  "a 
social  evil  appalling  in  its  magnitude"  and  "a 
terrible  blot  on  the  face  of  the  richest  countries 
in  the  world."  ^^ 

It  is  clear  that  unemployment  as  an  industrial 
phenomenon  does  not  result  from  an  absolute 
surplus  of  labor,  nor  even  from  a  surplus  of  labor 
relative  to  available  supplies  of  capital,  land,  or 
directive  intelligence.  Increasing  wealth  and 
larger  per-capita  productivity  are  the  charac- 
teristics of  the  very  countries  where  the  evils 
of  unemployment  are  actually  experienced. 
Moreover,  labor,  far  from  being  a  drug  on  the 
market,  as  relative  excess  would  imply,  has 
steadily  gained  in  market  price.  In  Great  Brit- 
ain, for  example,  during  the  past  thirty  years 
(i 878-1907)  money  wages  in  the  principal  indus- 
tries have  risen  nearly  sixteen  per  cent,  whereas 
the  prices  of  ordinary  commodities  have  fallen 
nearly  nineteen  per  cent.^^ 

Socialist  opinion  from  the  time  of  Rodbertus 
has  insisted  that  a  periodic  discharge  of  quali- 
fied labor  is  a  phase  of  the  "anarchical"  pro- 
duction of  competitive  industry,  and  that  chronic 
unemployment  and  recurring  crises  are  inevitable 


THE  UNEMPLOYED  83 

consequences  of  the  capitalistic  regime.  In  some- 
thing of  the  same  strain  a  less  radical  group  of 
writers  have  urged  that  unemployment  is  the 
normal  result  of  the  gross  inequality  of  modern 
incomes,  whereby  a  large  part  of  the  product  of 
industry  is  of  necessity  "saved"  instead  of  being 
"consumed"  and  the  productive  energy  of  the 
nation  is  misdirected  and  ultimately  congested. 

From  such  necessitarian  doctrines,  political 
economists,  as  far  back  as  Jean  Baptiste  Say 
and  James  Mill,  have  emphatically  dissented, 
maintaining,  on  the  contrary,  that  an  "uni- 
versal glut"  is  inconceivable;  that  apparent 
overproduction  is  in  reality  misdirected  produc- 
tion or  partial  underconsumption;  that  inability 
of  competent  workmen  to  secure  employment 
is  the  symptom  of  temporary  industrial  disloca- 
tion in  which  too  many  men  have  undertaken 
to  do  some  things  and  too  few  others,  and  that 
the  remedy  is  a  gradual  readjustment  of  demand 
and  supply. 

Much  of  the  best  social  thought  and  effort  of 
our  day  is  being  expended  in  the  search  for  less 
wasteful  and  less  sluggish  correctives  of  unem- 
ployment than  are  implied  in  the  demand-and- 
supply  formula.  This  has  involved,  first,  an 
analytical  determination  of  the  several  causes 
responsible  for  involuntary  idleness,  and  there- 
after the  suggestion  of  specific  devices  to  meet 


^    84    THE  ABOLITION  OF  POVERTY 

the  case  of  each  distinct  category  of  the  unem« 
ployed. 

The  involuntary  idleness  of  the  industrially 
qualified  results  from  three  general  causes:  sea- 
'  sonal  fluctuations,  cyclical  depressions,  and  the 
tendency  of  modern  enterprise  to  accumulate 
a  reserve  fund  of  excess  labor.  Individual  cases 
of  unemployment  may  arise  and,  indeed,  mul- 
tiply by  reason  of  the  dissolution  of  particular 
business  establishments  or  in  consequence  of 
the  gradual  decay  of  entire  trades.  But  such 
instances  are  not  considerable  in  number  at  any 
given  time,  nor  do  they  call  for  general  treatment. 
Seasonal  fluctuations  are  a  normal  consequence 
of  climatic  conditions  and  social  habits.  Com- 
mon as  is  such  regular  alternation  of  activity 
and  dullness,  there  is  a  remarkable  smallness  in 
range  of  the  percentage  of  the  unemployed  even  in 
the  most  sensitive  trades.  Moreover,  such  sea- 
sonal unemployment  does  not  as  a  rule  involve 
acute  distress.  The  slackening  of  business  is 
more  likely  to  be  taken  up  by  a  reduction  in 
the  number  of  working  days  rather  than  by  an 
outright  discharge  of  workmen,  with  a  conse- 
quent distribution  of  the  loss  over  the  whole 
working  force.  In  addition,  the  fact  that  the  dull 
season  in  certain  trades  corresponds  to  an  active 
season  in  another  makes  it  possible  for  work- 
men who  are  discharged  from  their  usual  em- 


THE  UNEMPLOYED  85 

ployment  in  dull  season  to  find  some  subsidiary 
occupation  in  another  industry  not  so  affected. 
Finally,  seasonal  fluctuations,  in  so  far  as  regu- 
lar and  calculable,  are,  or  should  be,  allowed  for 
in  the  determination  of  wages,  the  rate  thereof 
being  correspondingly  higher  than  in  the  case  of 
unaffected  trades.  In  this  sense  any  industry 
whose  regularly  recurring  dull  seasons  bring 
distress  to  the  working  force  must  be  deemed 
parasitic  in  the  failure  of  average  earnings  to 
provide  a  sufficient  wage. 

The  cyclical  recurrence  of  industrial  depres- 
sions has  been  generally  accepted  by  economic 
students  as  a  feature  of  modern  industrial  life. 
Whether  imputable  to  physical  or  to  psycho- 
logical causes,  we  are  likely  to  continue  wit- 
nessing a  more  or  less  regular  succession  of  flush 
times,  culminating  in  feverish  speculation  and 
of  acute  depression,  the  aftermath  of  sharp 
crisis.  The  interval  between  crest  and  hollow 
may  be  lengthened,  the  degree  of  variation  may 
be  reduced,  but  some  measure  of  periodic  fluc- 
tuation, entailing  a  brisk  labor  market  at  one 
time  and  a  degree  of  unemployment  or  under- 
employment at  another,  is  likely  to  remain.  This 
is  the  phase  of  unemployment  which  calls  most 
imperatively  for  remedial  action.  As  compared 
with  seasonal  unemployment,  it  is  more  pro- 
longed in  duration,  it  involves  a  larger  propor- 


86    THE  ABOLITION  OF  POVERTY 

tion  of  the  labor  force  in  many  trades,  and  the 
date  of  reemployment  is  less  fixed  or  calculable. 

Allowance  made  for  seasonal  variation  and 
cyclical  depression,  there  still  remains  an  ap- 
parently irreducible  minimum  of  unemploy- 
ment which  is  not  temporary  but  chronic,  which 
obtains  in  skilled  and  organized  as  in  unskilled 
and  unorganized  trades,  and  which  results  from 
the  tendency  of  modern  industry  to  provide  itself 
with  a  reserve  fund  of  casually  and  irregularly 
employed  workmen  available  to  meet  excep- 
tional stress.  Examination  of  the  British  trade- 
union  returns  of  unemployment,  extending  back 
over  a  term  of  years,  discloses  the  striking  fact 
that  the  unemployed  percentage,  however  much 
it  may  fluctuate,  never  sinks  in  the  best  years 
much  below  two  per  cent.^^ 

This  tendency  to  accumulate  and  maintain 
reserves  of  labor  grows  out  of  the  existence  of 
separate  employers  carrying  on  the  trade  in  dif- 
ferent localities,  each  subject  to  irregularity  and 
fluctuation.  Instead  of  the  definite  requirement 
of  a  unified  labor  market,  separate  requisitions 
are  made  by  many  independent  employers  in 
removed  localities.  The  result  of  this  disorgan- 
ization is  clearly  indicated  by  Mr.  Beveridge: 
"Because  of  this  separation  the  actual  aggre- 
gate force  of  these  demands  is  normally  in  excess 
of  the  arithmetical  aggregate;  opposite  varia- 


THE  UNEMPLOYED  87 

tions  are  not  set  off  against  one  another  in  prac- 
tice as  they  are  in  the  statistics.  The  actual 
supply  tends,  of  course,  to  conform  to  the  actual 
demand;  that  is  to  say,  it  tends  normally  to  be 
in  excess  of  the  arithmetical  aggregate  of  the 
separate  demands.  In  other  words,  the  normal 
state  of  every  industry  is  to  be  overcrowded  with 
labour,  in  the  sense  of  having  drawn  into  it  more 
men  than  can  ever  find  employment  in  it  at  any 
one  time."  ^^ 

Distinct  progress  has  been  made  in  recent 
years  in  the  solution  of  the  problem  of  unem- 
ployment. Such  a  solution  makes  no  endeavor 
to  attain  the  ideal  of  continuous  work,  but  aims 
at  the  practical  result  of  preventing  any  man 
who  is  able  and  willing  to  work  from  sinking 
to  destitution  through  lack  of  employment. 
The  programme  of  relief  consists  of  (a)  public  / 
employment  exchanges,  (b)  other  measures  of 
decasualization,  and  (c)  unemployment  insur- 
ance. 

It  has  been  acutely  remarked  that,  whereas 
in  regard  to  all  ordinary  commodities  there  are 
markets  or  exchanges  to  which  purchasers  come 
and  sellers  resort,  in  regard  to  labor  the  prevail- 
ing method  of  seeking  employment,  that  is,  of 
selling  labor,  is  to  hawk  it  from  door  to  door.^^ 
The  first  and  probably  the  most  important  step 
in  the  campaign  against  unemployment  is  to 


88    THE  ABOLITION  OF  POVERTY 

do  away  with  this  practice  by  the  deliberate 
organization  of  the  labor  market  through  the 
establishment  of  public  employment  bureaus 
or  labor  exchanges.  Conducted  by  public  au- 
thority and  administered  by  expert  superin- 
tendents, such  agencies  are  designed  to  serve 
as  places  of  registry  to  which  unemployed  work- 
men may  come  and  to  which,  in  turn,  employers 
in  search  of  additional  men  may  turn.  There 
is  no  interference  with  the  wage  bargain,  the 
bureau  confining  its  efforts  to  bringing  the  two 
parties  to  the  contract  into  direct  contact.  The 
service  rendered,  while  free  of  any  charge,  is 
devoid  of  either  patronal  or  charitable  element. 
The  obvious  service  of  a  labor  bureau,  like 
any  commodity  market,  is  to  save  the  waste  of 
time  and  energy  involved  in  the  planless  search 
of  a  buyer  who  wishes  a  commodity  for  the  par- 
ticular seller  who  has  it  to  offer.  Not  only  is 
labor  a  commodity  in  this  sense,  but  one  pecu- 
liarly liable  to  deterioration  and  injury  from 
indiscriminate  hawking.  An  efficient  labor  ex- 
change can  attack  the  very  root  of  chronic  unem- 
ployment by  consolidating  the  aggregate  labor 
demand  of  separate  competing  employers  other- 
wise certain  to  supply  themselves  with  surplus 
reserves  of  casual  laborers,  some  part  of  whom 
are  thus  subject  to  under-employment.  Instead 
of  five  employers,  each  seeking  to  attract  one 


THE  UNEMPLOYED  89 

hundred  men  although  eighty  meet  normal  re- 
quirements and  the  larger  number  represent  an 
infrequently  attained  maximum  need,  a  labor 
exchange,  acting  upon  the  principle  akin  to  that 
of  a  consolidated  banking  reserve  that  all  maxi- 
mum demands  are  not  presented  simultaneously, 
can  encourage  four  hundred  and  fifty  men  to 
look  forward  to  such  employment  and  divert 
the  remaining  fifty  into  normally  remunerative 
channels.  Finally,  a  labor  exchange,  once  se- 
curely established  in  the  estimation  of  employers 
and  employed,  can  perform  important  though 
informal  service  in  giving  advisory  suggestion, 
sympathetic  aid,  and  even  educational  guidance. 
It  thus  passes  from  a  remedial  device  to  a  posi- 
tive influence  in  social  progress. 

The  organization  of  the  labor  market  may  be 
supplemented  by  various  measures  designed  to 
aid  decasualization  and  deconcentration.  Of 
this  character  are  the  systematic  provision  of 
public  work,  greater  elasticity  in  the  working- 
hours  and  wage  rates  of  those  actually  employed 
in  lieu  of  additions  to  or  reductions  from  the 
ranks  of  employed,  and  the  decentralization  of 
town  population  by  the  provision  of  cheap  and 
rapid  transit  between  town  and  country,  making 
it  possible  for  urban  workmen  to  live  in  the 
country  and  to  tide  over  periods  of  unemploy- 
ment by  the  cultivation  of  small  plots  of  ground. 


90    THE  ABOLITION  OF  POVERTY 

With  this  may  go  compulsory  industrial  train- 
ing and  continuation  schools  for  all  youths,  de- 
signed to  avoid  the  recruiting  of  "blind-alley" 
occupations,  as  well  as  to  reduce  the  supply  of 
juvenile  labor  and  to  hasten  the  absorption  of 
unemployed  adult  labor.^^ 

For  the  completely  efficient  organization  of 
the  labor  market,  provision  must  be  made  for 
tiding  over  the  unemployment  due  to  seasonal 
fluctuation,  to  cyclical  variation,  to  trade  decay 
or  individual  misfortune,  by  measures  more 
immediate  than  are  offered  by  labor  exchanges 
and  supplementary  measures  of  decasualiza- 
tion.  This  prompt  relief  can  best  be  afforded  by 
some  system  of  insurance  against  unemployment. 
The  device  itself  is  familiar.  Overlooking  minor 
and  somewhat  unconvincing  experiments  by 
local  bodies,  the  unemployment  benefits  main- 
tained by  representative  trade-unions  give  the 
best  evidence  of  the  practicability  of  such 
aid.  Unfortunately  only  the  stronger  and  more 
stable  unions  have  been  able  to  evolve  and 
maintain  unemployment  benefits.  In  Great 
Britain  it  has  been  estimated  that  not  more  than 
one  third  of  the  trade-unionists  have  this  pro- 
tection; in  the  United  States  the  proportion  is 
notably  less,  probably  not  more  than  one  twen- 
tieth. For  the  great  body  of  unorganized  workers 
there  is  nothing  of  the  kind  whatever. 


THE  UNEMPLOYED  91 

Great  Britain  is  the  first  country  to  meet 
squarely  the  issue  thus  presented  by  supple- 
menting a  comprehensive  system  of  labor  ex- 
changes with  a  scheme  of  unemployment  in- 
surance. The  National  Insurance  Act  of  191 1 
provides  for  the  formation  of  an  Unemployment 
Fund  by  definite  contributions  from  employers 
and  workmen,  supplemented  by  a  substantial 
state  grant,  to  be  used  in  payment  of  specified 
benefits  to  such  workmen  when  unemployed.  In 
addition,  voluntary  insurance  against  unemploy- 
ment is  encouraged  by  the  grant  of  state  sub- 
ventions to  trade-unions  and  other  associations 
providing  such  relief.  The  first  operation  of 
the  measure  is  limited  to  certain  building  and 
engineering  trades  embracing  some  2,400,000 
workmen  out  of  a  total  laboring  population  of  I6,- 
ooo,ooo.  But  the  scope  of  the  system  may  be 
extended  by  administrative  authority,  and  this  will 
undoubtedly  be  done  as  rapidly  as  circumstances 
warrant.  The  measure  became  operative  in  July, 
1912,  and  it  is  too  early  to  speak  of  results.  The 
consensus  of  opinion  is,  however,  clearly  that  the 
principle  of  the  scheme  is  sound,  that  its  provi- 
sions are  conservative,  and  that  such  defects  as 
are  likely  to  develop  are  remediable  faults  inevi- 
tably incident  to  pioneer  social  legislation. 

There  remains  to  be  briefly  noted  the  condi- 
tion of  deliberate  unemployment  or  voluntary 


92    THE  ABOLITION  OF  POVERTY 

idleness,  presented  by  the  shiftlessness,  the  malin- 
gering, and  the  vagrancy  of  the  work-shy.  It 
is  from  the  chronically  under-employed  that 
these  groups  are  largely  recruited,  and  to  the 
extent  that  unemployment  is  eliminated  the 
supply  source  of  this  sorry  company  will  be  re- 
duced. For  the  remnant  not  so  accounted  for  — 
the  body  lightly  described  as  "the  unworthy 
poor,"  but  in  reality  social  parasites,  "as  defi- 
nitely diseased  as  the  inmates  of  hospitals,  asy- 
lums, and  infirmaries"  —  medical  and  correc- 
tional devices  in  the  nature  of  labor  colonies 
and  reformatory  schools  can  properly  replace 
the  existing  ill-considered  provision  of  food  and 
shelter.»o 


CHAPTER  VII 

THE   UNEMPLOYABLE 

The  adequate  payment  of  the  employed,  the 
industrial  absorption  of  the  unemployed,  will 
still  leave  uncorrected  one  cause  of  poverty  — 
the  dependence  of  those,  neither  defectives 
nor  delinquents,  who,  by  reason  of  physical 
infirmity  or  disability,  are  unemployable  at  any 
economically  sufficient  wage. 

Some  part  of  this  incompetence  is  the  direct 
sequel  of  underpayment  and  of  unemployment. 
Men  whose  physical  vigor  is  sapped  by  the  under- 
vitalization  which  results  from  an  insufficient 
wage,  or  whose  moral  independence  is  weakened^ 
by  the  bitter  distress  which  follows  in  the  train 
of  involuntary  idleness  tend  by  sheer  law  of 
disuse  to  become  economically  unserviceable. 
The  payment  of  a  sufficient  wage  and  the  pro- 
vision of  regular  employment  may  therefore  be 
expected,  over  and  above  their  direct  gain  to  the 
workmen,  to  avert  the  more  insidious  impair- 
ment of  earning  capacity  growing  out  of  physi- 
cal and  mental  deterioration. 

By  far  the  larger  proportion  of  the  unem- 
ployable class  owe  their  condition  to  a  very  dif- 


94    THE  ABOLITION  OF  POVERTY 

ferent  cause  —  the  blight  of  sickness,  industrial 
accident,  or  old  age.  For  the  consequent  dis- 
ability, the  ordinary  workman  has  no  margin 
of  safety.  Whether  the  omission  be  due  to  lack 
of  foresight,  to  lack  of  resources,  or  to  lack  of 
insuring  devices,  the  end  is  the  same.  There 
comes,  without  compensating  provision,  a  loss 
of  economic  efficiency  entailing  inability  to  se- 
cure employment  at  the  prevailing  rate  of 
wages. 

The  old  laissez-faire  philosophy  had  a  charac- 
teristic remedy  for  this  tendency.  Self-in- 
terest and  free  competition  must,  in  the  long 
fvjun,  it  contended,  give  the  laborer  a  wage  at 
•^  least  sufficient  not  only  to  afford  subsistence  for 
himself  and  his  family,  but  also  to  put  aside 
enough  to  provide  for  the  average  disability 
incident  to  accident,  invalidity,  or  old  age. 
If  the  wages  actually  paid  fell  below  this  stand- 
ard for  any  considerable  time,  the  supply  of 
labor  must  be  less  than  the  normal  requirement 
and  the  competition  of  rival  employers  must 
soon  restore  wages  to  the  true  level.  It  was  ad- 
mitted, however,  that  such  disturbances  were 
undesirable,  even  though  eventually  resulting 
in  a  restored  equilibrium.  Accordingly  all  edu- 
cational devices  —  savings  banks,  friendly  so- 
cieties, cooperative  purchasing,  patronal  aid, 
and  the  beneficiary  activities  of  trade-unions  — 


THE  UNEMPLOYABLE  95 

likely  to  develop  habits  of  thrift  and  frugality 
in  the  working-classes  were  to  be  encouraged, 
as  making  provision  for  fortuitous  or  calculable 
disability.  In  all  this,  however,  care  must  be 
taken  to  avoid  anything  likely  to  sap  the  wage- 
earner's  self-reliance  or  to  weaken  the  force  of 
his  self-interest. 

The  cruel  exhibit  of  modern  industrial  expe- 
rience has  taught  the  utter  futility  of  such  rea- 
soning. Free  competition  in  the  labor  market, 
in  so  far  as  it  implies  individual  bargaining  in 
wage  contracting,  is  certain  to  leave  the  work- 
ingman,  in  the  more  easily  recruited  occupa- 
tions, in  receipt  of  wages  barely  sufficient  to 
maintain  a  decent  livelihood.  No  amount  of 
thrift  or  foresight  will  here  provide  for  the 
"rainy  day,"  because  there  is  literally  nothing 
that  can  be  so  set  aside  —  save,  indeed,  at  the 
cost  of  harmful  deprivation.  Under  such  con- 
ditions of  low  wages  or  irregular  employment, 
life  is  at  best  a  hard,  unremitting  struggle. 
When  to  it  come  the  misfortunes  of  accident 
or  of  illness  and  the  inevitable  infirmities  of  old 
age,  there  is  no  recourse  but  desperate,  unavail- 
ing resistance  and  ultimate  poverty. 

For  this  form  of  industrial  maladjustment, 
modern  trade-unionism  is  at  most  a  pallia- 
tive. Theoretically,  its  devices  —  mutual 
insurance  and  collective  bargaining  —  can  se- 


96    THE  ABOLITION  OF  POVERTY 

cure  for  all  wage-earners  adequate  provision 
against  disability.  Practically,  a  great  body  of 
toilers  lack  the  possibility  of  such  achievement. 
This  is  the  lesson  of  a  century  of  trade-union 
history  in  England  and  the  United  States.  In 
certain  trades  —  in  consequence  of  the  nature 
of  the  industry,  the  quality  of  the  workmen, 
sometimes  even  of  more  subtle  elements  of  en- 
vironment and  leadership  —  a  powerful  and 
militant  unionism  is  possible.  In  other  trades, 
attempts  at  organization  seem  doomed  to  re- 
sult, not  once,  but  over  and  over  again,  in  loose 
and  feeble  combinations  galvanized  from  time 
to  time  into  efficiency,  but  utterly  lacking  in 
that  cohesiveness  and  endurance  necessary  for 
successful  industrial  contest.  Finally,  over  a 
considerable  part  of  the  labor  field,  comprising 
the  parasitic  trades,  recruited  from  the  unskilled, 
the  overcrowded,  and  the  under-employed, 
unionism  has  never  been  nor  is  likely  soon  to 
be  even  attempted. 

For  this  semi-submerged  body  of  toilers,  state 
intervention,  in  the  form  of  decasualization, 
deconcentration,  and  minimum  wage  legisla- 
tion, must  be  invoked  to  secure  even  an  imme- 
diately sufficient  wage.  The  requirements  of 
disability,  invalidity,  and  old  age  must  be  met 
from  another  quarter.  Even  were  the  newly 
constituted  wage  level  high  enough  to  permit 


THE  UNEMPLOYABLE  97 

deliberate  provision  for  such  disability,  the  very 
class  defects  —  physical  and  mental  —  which 
make  such  intervention  necessary  preclude  the 
possibility  of  self-help.  Thus,  both  for  a  great 
body  of  wage-earners  potentially  organizable 
but  in  reality  uncertain  and  unstable,  and  for 
the  still  greater  body  of  toilers  for  whom  such 
combination  is  in  any  reasonable  sense  hopeless, 
there  is  need  of  systematic  provision  against 
fortuitous  and  calculable  disability,  if  the  advent 
of  poverty  is  to  be  averted. 

This  condition  has  led  the  industrial  states  of 
our  day  to  consider,  and,  to  an  increasing  extent, 
to  adopt,  systems  of  compulsory  state  insurance  /j^ 
against  industrial  accident,  sickness,  and  old^ 
age.  The  primacy,  as  to  origin  and  scope,  in 
the  matter  of  such  social  insurance  belongs  to 
Germany.  Projected  thirty  years  ago  along  rela- 
tively simple  lines  as  a  tentative  device  to  com- 
bat the  rising  strength  of  socialism,  German 
compulsory  state  insurance  against  accidents, 
sickness  and  infirmity,  and  old  age  has  been  ex- 
tended and  developed  step  by  step  until  it  now 
constitutes  a  veritable  "social  charter  of  labour.'* 
The  example  of  Germany  has  been  followed  by 
or  has  influenced  other  industrial  states.  Of 
these,  Great  Britain  is  the  most  recent,  and  in 
some  respects  the  most  interesting  convert, 
whereas,  as  in  so  many  other  movements  toward 


98    THE  ABOLITION  OF  POVERTY 

social  betterment,  the  United  States  has  been 
conspicuously  laggard. 

The  most  urgent  form  of  such  social  provision 
is  adequate  insurance  against  industrial  acci- 
dent. In  the  United  States  there  are  each  year 
probably  not  less  than  30, OCX)  fatal  and  400,000 
grave  industrial  accidents  —  the  latter  entailing 
complete  disability  for  short,  and  partial  disa- 
bility for  protracted,  periods.^ ^  Every  such  acci- 
dent leaves  in  its  wake  a  degree  of  misery  rang- 
ing  from  the  strain  of  temporary  wage  losses  to 
the  complete  dependence  of  unprovided  widows 
and  children.  Moreover,  this  social  distress  is 
cumulative  in  amount,  being  at  any  given  time 
the  total  of  a  preceding  term  of  years.  The  legal 
remedy  for  industrial  accident,  centering  about 
the  principle  of  employer's  liability,  has  been 
notoriously  Inadequate  to  meet  this  require- 
ment. The  so-called  defenses  which  the  common 
law  has  evolved  upon  the  idea  of  tort  or  wrong  — 
assumption  of  risks,  contributory  negligence, 
and  co-employee's  fault  —  have  in  actual  prac- 
tice left  a  vast  majority  of  the  accidents  alto- 
gether uncompensated,  or  has  awarded  small 
and  disproportionate  compensation,  and  then 
only  after  considerable  lapse  of  time  and  expen- 
sive legal  processes.  In  lieu  of  this  an  adequate 
system  of  social  insurance  definitely  annuls  the 
legal  doctrines  of  fault  and  automatically  pro- 


THE  UNEMPLOYABLE  99 

vides  for  every  industrial  accident  in  any  form 
of  employment  sufficient  compensation  to  main- 
tain a  decent  standard  of  life  for  the  sufferer  or 
for  those  dependent  upon  his  earnings  during 
the  entire  period  of  disability  or  dependence. 
The  cost  of  such  provision  is  borne,  in  the  first 
instance,  by  the  employer,  but  finds  ultimate 
incidence  as  an  element  in  the  cost  of  production 
upon  society  in  general. 

Remarkable  as  has  been  the  progress  of  the 
compensation  movement  in  the  United  States 
in  the  last  five  years,  only  a  beginning  has  been 
made.^2  Some  twenty  States  have  enacted  such 
legislation  and  the  roster  is  rapidly  lengthening. 
But  in  content  the  exhibit  is  more  encouraging 
as  to  the  future  than  adequate  as  to  the  present. 
Limitation  as  to  employments,  traces  of  the 
fault  principle,  inadequate  scales  of  compensa- 
tion, delay  in  initial  payment,  insufficient  medi- 
cal and  surgical  provision,  are  characteristic 
features  of  American  legislation.  On  the  other 
hand,  no  phase  of  social  betterment  is  struggling 
more  successfully  to  a  higher  level.  With  that 
imitative  yet  progressive  spirit  in  social  legis- 
lation which  is  one  redeeming  feature  of  our 
coordinated  political  system,  each  new  aspirant 
Commonwealth  starts  from  the  plane  already 
attained.  There  are  likely  to  be  frequent  defeat 
and  occasional  recession,  but  adequate  compen- 


100    THE  ABOLITION  OF  POVERTY 

sation  both  in  amount  and  in  term  is  even  now 
a  definitely  established  goal  in  every  progressive 
State  of  the  Union. 

Disease  and  sickness  are  causes  of  poverty 
to  an  even  greater  degree  than  industrial  acci- 
dent. Abrupt  illness,  severe  wage  losses,  inad- 
^  equate  medical  treatment,  insufficient  convales- 
cence, chronic  morbidity  form  a  disaster-bring- 
ing sequence  familiar  to  all  social  workers.  Such 
scanty  statistics  as  we  have  suggest  that  from 
forty  to  fifty  per  cent  of  the  working  population 
are  annually  affected  by  illness,  and  that  nearly 
one  third  of  those  receiving  relief  from  public 
charitable  institutions  have  been  brought  to 
this  pass  by  sickness.^ ^  Some  part  of  this  quota 
represents  the  normal  liability  of  mankind  to 
sickness.  But  a  considerable  part  is  distinctly 
industrial  and  social  in  character  —  occupa- 
tional disease  and  physical  under- vitalization. 
From  whatever  source  proceeding  it  is  vitally 
important,  in  the  social  interest,  that  the  sick- 
ness of  wage-earners  receive  adequate  remedial 
treatment.  This  is  dictated  not  only  by  con- 
siderations of  economic  conservation,  but  by 
the  grave  danger  of  ensuing  disability  and  de- 
pendence. 

Various  devices  have  been  developed  or  util- 
ized by  workingmen  themselves  for  meeting  the 
economic  strain  of  sickness,  beyond  the  provi- 


THE  UNEMPLOYABLE  loi 

sion  which  personal  thrift  and  foresight  are  able 
to  supply.  Beneficiary  features  of  trade-unions, 
friendly  societies,  establishment  funds,  fraternal 
orders,  and  industrial  insurance  companies  rep- 
resent the  endeavor  which  wage-earners  make 
to  avert  the  misery  and  ruin  of  sickness  and 
disease.  In  many  countries  such  agencies  have 
received  governmental  recognition,  at  first  by 
supervision  and  control,  thereafter  by  subven- 
tion and  aid. 

But  voluntary  provision,  even  when  subsi- 
dized, offers  no  final  solution.  It  obtains  only 
among  the  better-paid  classes  of  wage-earners 
and  is  weak  where  the  need  for  it  is  relatively 
greatest.  At  best  the  aid  which  it  renders  is 
insufficient  in  amount  and  duration,  and,  worst 
of  all,  it  imposes  the  cost  too  largely  upon  the 
wage-earner.  To  meet  these  essential  require- 
ments, the  most  enlightened  countries  of  the 
world  have  adopted  or  projected  systems  of^ 
compulsory  insurance  against  sickness.  Utiliz- 
ing existing  voluntary  agencies,  such  systems 
undertake,  by  joint  contribution  of  employers, 
workmen,  and  the  public  treasury,  to  provide 
beneficiary  payments  for  every  wage-earner,  in 
the  event  of  sickness,  for  the  entire  period  of 
disability  and  to  an  amount  sufficient  to  main- 
tain the  accustomed  standard  of  life. 

The  economic  problem  of  old  age  grows  out 


102    THE  ABOLITION  OF  POVERTY 

of  the  certainty  that  a  large  proportion  of  the 
body  of  wage-earners  find  it  sooner  or  later  im- 
possible to  secure  employment  because  of  failing 
efficiency.  The  pressure  and  tension  of  modern 
industrial  processes  bring  on  this  "economic  old 
age"  even  before  physical  infirmity  has  set  in. 
From  sixty  years  on  it  becomes  increasingly 
difficult  for  the  workman  to  retain  his  job.  Dis- 
placed eventually,  he  finds  partial  or  casual 
employment  only  to  lose  this  in  turn  with  de- 
clining competence.  Thereafter  accumulated 
savings  or  maintenance  by  children  can  alone 
ward  off  dependence.  How  unavailing  are  these 
last  resources  is  apparent  from  the  fact  that  out 
of  the  3,949,524  persons  in  the  United  States  in 
1 9 10  over  the  age  of  sixty-five,  it  has  been  esti- 
mated that  approximately  1,250,000  or  almost 
one  third,  are  supported  by  public  or  private 
charity.^^  But  the  more  serious  aspect  of  the 
problem  lies  with  the  remaining  two  thirds. 
Therein  are  large  bodies  of  men  and  women  who 
have  lived  decent,  useful  lives  and  who  now 
drag  out  their  last  years  in  want  and  penury  — 
less  acute  only  than  the  bitterness  of  outright 
dependence.  Some  idea  of  how  large  is  this  class 
may  be  formed  from  the  fact  that  in  Great  Brit- 
ain some  seventy-five  per  cent  of  the  popula- 
tion over  seventy  years  of  age  have  qualified 
as  in  need  of  old-age  relief;  in  France,  nearly 


THE  UNEMPLOYABLE  103 

fifty-seven  per  cent;  and  in  prosperous  Australia, 
of  those  above  sixty-five  years  of  age,  over  forty 
per  cent.  Making  the  most  liberal  allowance  for 
deception  and  fraud,  the  resulting  exhibit  is 
nevertheless  an  overwhelming  evidence  of  old- 
age  need. 

Voluntary  old-age  insurance,  even  when  heav- 
ily subsidized  by  the  state,  fails  to  meet  this 
requirement.  Only  a  small  proportion  of  the 
working-class  population,  and  presumably  the 
better-paid  part,  is  attracted  thereto,  the  per- 
centage of  lapses  is  very  large,  and  the  protection 
actually  acquired  is  "pitifully  small."  With  the 
failure  of  voluntary  insurance,  two  practicable 
methods  of  dealing  with  old-age  need  have  been 
evolved — compulsory  insurance  and  old-age  pen- 
sions. The  first  system  has  been  fully  devel- 
oped in  Germany,  the  second  is  best  represented 
in  Great  Britain.  Compulsory  old-age  insurance 
in  its  typical  form  provides  for  the  payment  to 
every  wage-earner,  whose  income  is  less  than  a 
designated  minimum,  of  a  definite  amount  begin- 
ning at  a  certain  age  and  continuing  until  death. 
The  cost  of  the  insurance  is  met  by  contributions 
of  workers  and  employers  in  equal  amount, 
supplemented  by  subsidies  from  the  state  treas- 
ury. Old-age  pensions,  on  the  other  hand,  rep- 
resent direct  governmental  provision  of  stipu- 
lated amounts  to  all  adults  above  a  certain  age 


104    THE  ABOLITION  OF  POVERTY 

not  specifically  disqualified,  without  contribu- 
tion by  employer  or  employed,  the  entire  cost 
being  met  by  the  public  treasury. 

In  the  United  States  systematic  provision  for 
old  age  has  hardly  passed  beyond  the  stage  of 
intelligent  discussion.  The  limited  jurisdiction 
of  industrially  competing  commonwealths  adds 
to  the  difficulty  of  such  provision  by  the  States, 
whereas  questions  of  constitutional  power  and 
political  expediency  complicate  the  question, 
viewed  as  a  possible  function  of  the  Federal 
Government.  As  in  the  case  of  sickness  insur- 
ance, the  existing  need  is  inadequately  met  by 
the  superannuation  benefits  and  old-age  insurance 
of  trade-unions,  fraternal  orders,  industrial  in- 
surance companies,  the  pension  and  retirement 
funds  of  industrial  establishments,  and  the  pen- 
sion provisions  of  state  and  municipal  govern- 
ments in  favor  of  public  employees.^^ 

A  notable  qualification  of  the  foregoing  is  the 
significance  of  the  national  military  pension 
system  as  a  form  of  old-age  provision.^^  It  is  a 
remarkable  fact  that  over  one  half  of  the  native 
white  male  population  of  the  United  States,  over 
sixty-five  years  of  age,  were  in  1910  receiving 
some  form  of  federal  pension.  If  the  Southern 
States,  where  relatively  few  pensions  are  paid, 
be  excluded,  this  proportion  rises  to  nearly  two 
thirds  of  the  native  white  males. 


THE  UNEMPLOYABLE  105 

There  is  only  a  rough  adjustment  between  old- 
age  dependence  and  pension  eligibility.  A  very 
considerable  part  of  those  in  receipt  of  pensions 
lie  without  the  ranks  of  the  aged  poor,  and,  on 
the  other  hand,  certain  large  categories  from 
whom  this  class  is  largely  recruited,  are  entirely 
excluded  from  the  benefits  of  the  pension  sys- 
tem. The  real  significance  lies  in  the  fact  that 
the  United  States  has  for  nearly  two  generations 
been  making  generous  expenditures  —  in  19 12 
the  cost  of  the  pension  system  was  $153,000,000, 
about  three  times  as  great  as  that  of  the  British 
old-age  pension  system  —  which,  even  though 
originally  inspired  by  other  considerations,  have 
as  their  actual  consequence  the  relief  of  a  mate- 
rial part  of  existing  old-age  dependence.  Both 
in  fiscal  provision  and  in  public  preparedness, 
the  way  has  been  paved  for  a  transition  to  a 
more  comprehensive,  a  more  equitable,  and 
probably  a  more  economical,  system  of  old-age 
provision. 


CHAPTER  VIII 

CONCLUSION 

The  argument  of  the  foregoing  pages  may  now 
be  briefly  summarized :  Poverty,  as  economic 
insufficiency,  is  to  be  distinguished  from  eco- 
nomic inequaUty  and  from  economic  dependence. 
Like  other  disorders  that  reduce  social  well- 
being,  the  failure  of  large  classes  in  every  modern 
community  to  secure  enough  to  make  possible 
decent  existence  is  a  positive  condition  conse- 
quent upon  determinable  causes.  A  notable 
service  of  economic  investigation  has  been  to 
ascertain  the  more  important  of  these  causes, 
and  to  set  forth  preventive  and  remedial  devices. 

Modern  economic  organization  provides  a 
national  dividend  potentially  large  enough  to 
obviate  individual  want.  There  is  nothing  inher- 
ent in  competitive  industry  whereby  this  divi- 
dend need  be  so  apportioned  as  to  create  great 
areas  of  poverty.  The  misdirections,  not  the 
normal  working,  of  twentieth-century  indus- 
trialism leave  large  elements  of  the  community 
in  receipt  of  incomes  less  than  enough  to  main- 
tain, in  the  long  run,  decent,  self-supporting 
existence  for  themselves  and  those  necessarily 


CONCLUSION  107 

dependent  upon  them.  These  insufficiently  pro- 
vided classes  —  the  great  supply-sources  of  pov- 
erty —  are  the  underpaid,  the  unemployed,  the 
unemployable. 

Chronic  underpayment  arises  from  failure  to 
substitute  'collective  for  individual  bargaining 
in  wage  contracting,  or  from  the  excessive  gains 
of  enterprisers,  or  from  the  social  undervaluation 
of  product.  Efficiently  organized  and  intelli- 
gently directed  trade-unionism  will  secure  for 
the  worker  at  least  that  part  of  the  product  of 
industry  which  free  competition  tends  to  award 
him.  In  so  far  as  groups  of  wage-earners  are 
unorganizable,  or  to  the  extent  that  industries 
or  subdivisions  of  industries  are  parasitic,  the 
state  must  intervene  to  define  minimum  wage 
conditions.  Unemployment,  understood  as  the 
involuntary  idleness  of  competent  workmen,  is 
the  result  of  cyclical  depression,  of  seasonal 
fluctuation,  and  of  the  disposition  of  modern 
enterprisers  to  supply  themselves  with  a  reserve 
fund  of  irregularly  employed  labor  available  in 
seasons  of  exceptional  activity.  Here,  labor 
exchanges,  compulsory  technical  training,  resi-  ^ 
dential  decentralization,  and  unemployment 
insurance  will  aid  the  workmen  in  escaping  the 
physical  and  moral  retrogression  that  comes 
swiftly  with  recurring  unemployment.  Finally, 
for  the  great  residuum  of  unemployables,  become 


io8    THE  ABOLITION  OF  POVERTY 

so  through  industrial  accident,  sickness,  or  old 
age,  a  comprehensive  system  of  social  insurance 
must  form  the  main  line  of  attack. 

There  are  three  possible  grounds  of  dissent 
from  the  foregoing  programme  of  economic  bet- 
terment. It  may  be  contended  (i)  that  the  meas- 
ures proposed  will  severally  fail  even  as  to  the 
specific  ends  in  view,  to  say  nothing  of  the  larger 
aim;  or  (2)  that,  while  effective  in  immediate 
purpose,  such  measures  are  mischievous  in  their 
final  consequence ;  or  (3)  that  poverty  results  in 
the  main  from  other  causes  than  those  examined, 
so  that  in  any  event  social  misery  would  remain. 

As  to  the  adequacy  of  the  respective  remedies 
proposed  in  correction  of  underpayment,  unem- 
ployment, and  disability,  the  case  rests  to  con- 
siderable extent  upon  positive  evidence.  The 
history  of  labor  organization  in  modern  industrial 
states  makes  clear  that,  whatever  be  its  ultimate 
social  or  moral  consequences,  the  direct  economic 
effect  of  efficient  trade-unionism  is  to  prevent 
underpayment.  The  facts  relating  to  minimum 
wage  legislation  are  too  recent  to  justify  as  defin- 
ite a  conclusion,  but  such  evidence  as  is  available 
indicates  that  legal  enactment  can  secure  a  decent 
wage  for  the  unorganizable  and  the  exploited. 
The  organization  of  the  labor  market  by  labor 
exchanges,  measures  of  decasualization  and 
unemployment  insurance,  as  a  corrective  of  un- 


CONCLUSION  109 

employment,  have  been  undertaken  in  Great 
Britain  after  a  thoroughgoing  investigation  of 
the  whole  problem  of  involuntary  idleness.  Fin- 
ally, more  or  less  comprehensive  systems  of  social 
insurance  against  disability,  sickness,  and  old  age 
are  in  operation  in  practically  every  industrial 
community  of  the  world  except  the  United  States. 

There  may  be  dissent,  in  the  second  place,  as 
to  the  social  desirability  of  the  measures  pro- 
posed, having  in  mind  ultimate  effect  rather 
than  immediate  consequence.  It  is  difficult  to 
meet  this  comfortable  inversion  of  the  burden 
of  proof.  Economic  analysis  can  determine  the 
causes  of  economic  disorder  and  formulate  speci- 
fic remedial  devices.  It  cannot  demonstrate  their 
aggregate  efficacy.  That  convincing  verification 
by  qualified  or  composite  experiment,  whereby 
the  pathologist  establishes  the  validity  of  his 
result  up  to  the  point  of  absolute  conclusiveness, 
is  denied  the  political  economist.  In  default  of 
experimental  proof  the  credential  of  any  social 
proposal  is  its  reasonableness. 

It  is,  however,  difficult  to  find  any  trace  of 
social  menace  in  what  has  been  suggested.  Such 
conceivable  possibilities  as  the  invasion  of  per- 
sonal freedom  through  trade-unionism,  the  undue 
extension  of  state  activities  in  the  correction  of 
unemployment,  the  sapping  of  individual  thrift 
by  social  insurance,  or  the  replacement  of  natural 


no    THE  ABOLITION  OF  POVERTY 

by  artificial  selection  in  social  evolution  are  not 
likely  to  disturb  the  thoughtful.  With  the  passing 
of  the  old  laissez-faire  philosophy  in  politics  and 
in  economics  has  gone  the  tyranny  of  "natural 
liberty.*'  Two  generations  of  industrial  regula- 
tion have  developed  a  new  sympathy  for  con- 
structive opportunism  in  social  reform.  Society 
has  lost  its  terror  of  the  old  bogies.  Given  an 
urgent  social  evil  and  a  reasonably  direct  remedy, 
there  is  little  chance  of  inaction  from  fear  of 
a  remote,  vaguely  defined,  and  hypothetically 
established  social  injury.  The  public  mind  has 
come,  more  or  less  explicitly,  to  believe  that 
so  large  are  the  powers  of  social  adaptation,  so 
recuperative  is  the  course  of  economic  readjust- 
ment that  the  correction  of  specific  ills  is  likely 
to  result  in  ultimate  general  gain. 

There  need  likewise  be  no  serious  concern  as  to  a 
possible  conflict  between  such  social  provision, 
on  the  one  hand,  and  the  implications  of  the 
modern  common  law  or  the  prevailing  concepts 
of  individual  justice,  on  the  other  hand.  Law 
and  justice  are  designed  to  realize  maximum 
well-being.  If  existing  devices  fail  in  securing 
this  end  in  certain  directions,  society  adopts  sup- 
plementary and  amendatory  measures.  Such 
changes  are  not  to  be  made  lightly;  the  more 
radical  their  character,  the  more  pronounced  the 
burden  of  proof  and  the  more  exacting  the  test 


CONCLUSION  in 

of  acceptability.  But  incongruities  between 
tested  proposals  and  prevailing  legal  concepts 
of  themselves  constitute  no  impasse.  Here,  as 
so  often  before  in  the  course  of  social  progress, 
if  conflicts  arise  there  will  be  "a  change  in  the 
existing  common  law  either  by  legislation  or  by 
judicial  decisions,"  and  a  less  tangible  revision 
of  the  current  conceptions  of  individual  justice 
in  the  particular  relationship  affected.^' 

The  direct  economic  cost  of  such  interven- 
tion, in  the  form  of  heavier  taxation  and,  more 
problematically,  of  increased  commodity  prices 
and  reduced  profits,  may  not  be  ignored.  An 
obvious  credit  against  this  charge  is  the  pres- 
ent social  burden  —  in  part  recorded,  in  much 
greater  degree  unrecorded  —  of  existing  poverty. 
The  net  addition  represents  that  moderate  re- 
adjustment of  individual  wealth,  in  the  form  of 
property  rights  and  surplus  incomes,  which  col- 
lective well-being  demands.  In  the  light  of  eco- 
nomic history,  there  is  no  reason  for  apprehend- 
ing that  such  heavier  imposition  will  arrest  the 
increase  of  capital.  Indeed,  in  averting  reaction- 
ary radicalism,  in  enhancing  social  weal,  in  en- 
larging general  consuming  power,  such  public 
expenditure  is  likely  to  prove  productive  both 
as  to  the  state  and  the  individual. 

There  may  be  dissent  on  the  score  that  the 
foregoing  analysis  does  not  take  account  of  all 


112    THE  ABOLITION  OF  POVERTY 

the  causes  of  poverty.  At  best  this  is  a  charge 
of  exaggeration  rather  than  of  error.  It  has  not 
been  maintained  that  the  correction  of  underpay- 
ment, unemployment,  and  disability  will  effect 
such  complete  and  immediate  elimination  of 
misery  that  the  persistence  or  reappearance  of 
even  a  modicum  thereof  is  to  be  accounted  proof 
of  failure.  This  is  the  apparent  magic  of  chemical 
reaction,  not  the  working  of  social  change.  Even 
the  most  confident  triumphs  of  that  most  con- 
fident of  the  sciences  having  to  do  with  human  life 
—  the  theory  and  practice  of  medicine  —  defers 
to  this  necessity.  Since  Jenner's  time,  the  effect 
of  vaccination  as  a  complete  protection  against 
smallpox  has  been  declared  and  recognized  with 
virtual  finality.  But  despite  this,  no  country  — 
not  even  of  highly  civilized  rank  —  has  been  or 
is  anything  like  free  from  the  scourge.  In  the 
United  States  alone,  during  191 1,  21,767  cases 
were  reported  to  the  United  States  Public  Health 
Service,  the  area  covered  being  only  a  portion 
of  the  United  States  and  the  computation  being 
in  other  respects  an  underestimate.^^  So,  too, 
even  though  the  causes  of  poverty  may  have 
been  unerringly  determined  and  the  means  of  pre- 
vention explicitly  set  forth,  there  will  be  no  instant 
cessation.  Arrest  of  increase,  prevention  of  spread, 
treatment  at  the  source,  —  all  this  rather  than 
outright  suppression  are  what  will  come  to  pass. 


CONCLUSION  113 

Even  more,  economic  relations  are  too  intri- 
cate, economic  analyses  are  too  qualified,  ever 
to  justify  doctrinaire  certainty  in  any  large  social 
interpretation.  It  may  very  well  be  that  with 
more  perfect  acquaintance  with  the  social  or- 
ganism and  its  diseases  will  come  disclosure  of 
other  forces  than  those  now  isolated  directly 
responsible  for  economic  want.  The  economist 
will  study  these  as  they  present  themselves  and 
search  for  preventive  devices.  But  such  possi- 
bilities should  not  check  present  activity.  At  this 
juncture,  an  analysis  of  poverty  discloses  certain 
definite  causes.  If  we  devote  ourselves  to  the 
prevention  of  these,  and  continue  to  investigate 
and  to  study,  the  future  can  with  reasonable 
assurance  be  left  to  work  out  its  own  problems. 

The  programme  of  economic  betterment  here 
outlined  is  neither  easy  nor  quick  of  attainment. 
But  tested  by  accepted  economic  philosophy,  it 
is  practicable  —  and  worth  while.  From  the 
days  of  Plato,  social  optimists  have  described 
ideal  commonwealths  wherein  there  was  no  want. 
Such  Utopias  were  fashioned  as  fantasies  or  as 
satires.  Now,  in  our  own  day,  the  conquest 
of  poverty  looms  up  as  an  economic  possibility, 
definitely  within  reach  —  if  only  society  desire 
it  sufficiently  and  will  pay  enough  to  achieve  it. 


NOTES 

1.  Adam  Smith,  An  Inquiry  into  the  Nature  and  Causes 
of  the  Wealth  of  Nations  (London,  1776),  Introduc- 
tion. *> 

2.  Alfred  Marshall,  Principles  of  Economics,  sixth 
edition  (London,  1910),  pp.  2-3. 

3.  Robert  Hunter,  Poverty  (New  York,  1904),  pp.  7, 60- 
61,  337. 

4.  A.  L.  Bowley,  "Working-Class  Households  in  Read- 
ing," in  Journal  of  the  Royal  Statistical  Society,  June, 

1913. 

5.  F.  H.  Streightoff,  "The  Distribution  of  Incomes 
in  the  United  States,"  in  Columbia  University  Stud- 
ies in  History,  Economics,  and  Public  Law,  vol. 
Lii,  no.  2,  p.  139.  Professor  Scott  Nearing's  esti- 
mates are  materially  lower;  see  Wages  in  the  United 
States,  IQ08-IQ10  (New  York,  191 1),  pp.  213-15. 

6.  Report  of  the  Special  Committee  on  Standard  of 
Living  in  Eighth  New  York  State  Conference  of 
Charities  and  Correction,  Albany,  November  12- 
14,  1907;  in  R.  C.  Chapin,  The  Standard  of  Living 
among  Workingmen's  Families  in  New  York  City 
(New  York,  1909),  pp.  263-82.  Professor  Chapin's 
review  of  the  same  data  leads  to  the  less  favorable 
conclusion  that  an  income  of  $900  is  needed  to  main- 
tain a  normal  physical  standard,  ibid.,  p.  246. 

7.  Report  of  Special  Committee  of  Investigation,  ap- 
pointed by  the  Commission  on  the  Church  and  Social 
Service  of  the  Federal  Council  of  the  Churches  of 
Christ  in  America,  concerning  the  Industrial  Situa- 
tion at  South  Bethlehem,  Pa.  (New  York,  19 10), 
p.  18. 


ii6  NOTES 

8.  Chapin,  op.  cit.,  p.  241. 

9.  Bulletin  of  the  United  States  Bureau  of  Labor  Statis- 
tics, whole  number  140  (Washington,  1914),  p.  11. 

10.  Bulletin  of  the  United  States  Bureau  of  Labor  Statis- 
tics, whole  number  143  (Washington,  19 14),  pp. 
7-8.  ^ 

11.  Chapin,  op.  cit.,  pp.  2-4. 

12.  Ibid.,  p.  60. 

13.  C.  S.  Loch,  "Charit>%"  in  Encyclopedia  Britan- 
nica,  eleventh  edition  (Cambridge,  1910);  E.  T. 
Devine,  Misery  and  its  Causes  (New  York,  1912), 
pp.  7-9. 

14.  W.  E.  H.  Lecky,  History  of  European  Morals  from 
Augustus  to  Charlemagne,  third  edition  (New  York, 
1890),  vol.  I,  p.  93. 

15.  V.  G.  Simkhovitch,  Marxism  versus  Socialism  (New 
York,  1913),  p.  98. 

16.  Progress  and  Poverty  (New  York,  1880),  pp.  7,  9. 

17.  Social  Statics  (1851);  quoted  and  reaffirmed  in 
The  Man  versus  the  State  (New  York,  1888), 
pp.  67-68. 

18.  A.  E.  Hake  and  O.  E.  Wesslau,  The  Coming  Indi- 
vidualism (London,  1895),  p.  11. 

19.  Simkhovitch,  op.  cit.,  p.  124. 

20.  T.  H.  Huxley,  "Administrative  Nihilism"  (1871), 
in  Method  and  Results    (New  York,  1898),  p.  28. 

21.  "Government:  Anarchy  or  Regimentation"  (1890) 
in  ibid.,  p.  391. 

22.  Principles  of  Economics,  p.  3 ;  Devine,  op.  cit.,  p.  265. 

23.  James  Bonar,  Parson  Malthus  (Edinburgh,  188 1), 
p.  5;  see  also  the  valuable  study,  by  the  same  au- 
thor, of  Malthus  and  his  Work  (London,  1885). 

24.  An  Essay  on  the  Principle  of  Population,  as  it  affects 
the  Future  Improvement  of  Society  (London,  1798), 
pp.  14-17. 


NOTES  117 

25.  Herbert  Spencer,  The  Principles  of  Biology,  part  vi, 
chap.  XIII,  sec.  375;  in  Appleton  reprint  (New  York, 
1898),  vol.  II,  p.  506. 

26.  Sight  must  not  be  lost  of  the  tremendous  possi- 
bilities of  increasing  food-supply  by  reducing  losses 
from  disease.  To  take  a  single  example:  the  losses 
of  swine  in  the  United  States  in  191 3,  in  the  main 
from  hog  cholera,  were  119  per  1000  head.  This 
meant  a  loss  of  nearly  800,000,000  pounds  of  dressed 
meat  and  lard,  sufficient  to  furnish  every  family  of 
the  United  States,  averaging  four  and  a  half  per- 
sons, about  forty  pounds.  The  Bureau  of  Statis- 
tics of  the  United  States  Department  of  Agricul- 
ture declares  that  "If  there  had  been  no  such  loss, 
probably  increasing  scarcity  of  meat  would  have 
been  largely  prevented."  {Farmers'  Bulletin,  no. 
590,  April  23,  1914,  p.  2). 

27.  Crop  Reporter,  published  by  authority  of  the  Secre- 
tary of  Agriculture,  vol.  xiv,pp.  30-31  (April,  1912). 

28.  Poverty:  A  Study  of  Town  Life  (i6mo,  reprint),  p. 
361. 

29.  Political  Economy,  third  edition  (London  and  Glas- 
gow, 1854),  p.  86. 

30.  Principles  of  Political  Economy,  with  some  of  their 
Applications  to  Social  Philosophy,  book  iv,  chap. 
II,  sec.  2;  in  People's  edition  (London,  1865),  p.  426. 

31.  i4n  Inquiry  into  the  Nature  and  Causes  of  the  Wealth 
of  Nations,  book  i,  chap,  viii;  ed.  Cannan  (London 
and  New  York,  1904),  pp.  65,  75. 

32.  Essays  in  Finance,  second  series  (London,  1886), 
p.  333. 

33.  W.  H.  Beveridge,  Unemployment:  A  Problem  of  In- 
dustry, third  edition  (London,  19 12),  p.  7. 

34.  Thoughts  on  Political  Economy  (Baltimore,  1820), 
p.  273- 


ii8  NOTES 

35.  Essay  on  the  Rate  of  Wages  (Philadelphia,  1835), 
pp.  244-45. 

36.  Raymond,  op.  cit.,  pp.  266-67. 

37.  Twelfth  Census  of  the  United  States,  1900,  vol. 
VI,  "Agriculture,"  part  ill  (Washington,  1902), 
pp.  64-65. 

38.  Computed  from  Statistical  Abstract  of  the  United 
States,  igi2  (Washington,  19 13),  pp.  745-776. 

39.  Ibid.,  pp.  762-63,  773-74. 

40.  Thirteenth  Census  of  the  United  States,  1910,  vol. 
V,  "Agriculture,  1909-10"  (Washington,  19 13), 
PP-  536,  565- 

41.  Statistical  Abstract  of  the  United  States,  IQ12  (Wash- 
ington, I9i3),p.  738;  Bulletin  no.  122  of  the  Bureau 
of  the  Census,  Estimates  of  Population,  igio-14 
(Washington,  1914);  I.  M.  Rubinow,  Social  Insur- 
ance, with  Special  Reference  to  American  Conditions 
(Washington,  19 13),  p.  490. 

42.  Simkhovitch,  op.  cit.,  p.  145. 

43.  Hake  and  Wesslau,  op.  cit.,  p.  30. 

44.  Evidence  before  Lords'  Committee  on  Apprentices 
and  Others  Employed  in  Mills  and  Factories;  with 
Appendix.  Three  parts  (London,  18 18),  pp.  182-83, 
189. 

45.  Letters  on  the  Factory  Act,  as  it  affects  the  Cotton 
Manufacture  (London,  1837),  pp.  14-16. 

46.  Money  answers  all  Things  (London,  1734);  ed.  Hol- 
lander (Baltimore,  19 14),  p.  159. 

47.  Principles  of  Political  Economy,  book  11,  chap.  I, 
sec.  i;  People's  edition,  p.  123. 

48.  The  Quintessence  of  Socialism,  chap,  iii;  trans. 
Bosanquet  (New  York,  n.d.),  pp.  28-29. 

49.  Principles  of  Political  Economy,  Book  11,  chap.  I, 
sec.  3;  People's  edition,  p.  128. 

50.  Rev.  Hastings  Rashdell,  "The  Philosophical  Theory 


NOTES  119 

of  Property,"  in  Property,  its  Duties  and  Rights 
(London,  1913),  P-  64. 

51.  Gerard  De  Malynes,  A  Treatise  of  the  Canker  of 
England's  Commonwealth  (London,  1601). 

52.  E.  T.  Devine,  Efficiency  and  Relief:  A  Programme 
of  Social  Work  (New  York,  1906),  p.  13. 

53.  David  Ricardo,  On  the  Principles  of  Political  Econ- 
omy and  Taxation,  second  edition  (London,  18 19), 

p.  95. 

54.  Report  of  the  Board  of  Arbitration  in  the  Matter  of 
the  Controversy  between  the  Eastern  Railroads  and 
the  Brotherhood  of  Locomotive  Engineers,  Novem- 
ber 2,  1913  (n.p.,  n.d.),  p.  47- 

55.  Report  of  the  Commission  of  the  Minimum  Wage 
Boards,  January,  19 12  (Boston,  1912),  p.  18. 

56.  An  Inquiry  into  the  Nature  and  Causes  of  the  Wealth 
of  Nations,  book  l,  chap,  viii;  ed.  Cannan,  vol.  i, 
p.  68. 

57.  Sidney  and  Beatrice  Webb,  Industrial  Democracy 
(London,  1897),  part  ill,  chap.  i. 

58.  G.  E.  Barnett,  "The  Introduction  of  the  Linotype," 
in  The  Yale  Review,  vol.  xiii,  November,  1904. 

59.  G.  E.  Barnett,  "The  Dominance  of  the  National 
Union  in  American  Trade-Union  Organization," 
in  Quarterly  Journal  of  Economics,  May,  19 13, 
p.  465. 

60.  Twelfth  Census  of  the  United  States,  1900,  "Special 
Report  on  Occupations"  (Washington,  1904),  pp. 
1-lii;  L  A.  Hourwich,  "The  Social-Economic 
Classes  of  the  Population  of  the  United  States" 
in  Journal  of  Political  Economy,  March,  191 1; 
Rubinow,  Social  Insurance,  p.  29. 

61.  L.  H.  Haney,  "Organized  Labor  and  the  Recent 
Advance  in  Prices,"  in  Quarterly  Publications  of  the 
American  Statistical  Association,  June,  1910,  p.  154. 


120  NOTES 

62.  J.  Laurence  Laughlin,  "The  Monopoly  of  Labor," 
in  Atlantic  Monthly,  October,  19 13,  p.  449.  Cf. 
also  Victor  Morawetz,  Income  of  the  Nation  and 
Dividends  of  the  Masses  (New  York,  n.d.),  re- 
printed from  New  York  Sunday  Sun,  December  21, 
1913,  pp.  8-12. 

63.  G.  E.  Barnett,  "The  Printers:  A  Study  in  Ameri- 
can Trade-Unionism,"  in  American  Economic  As- 
sociation Quarterly,  third  series,  vol.  x,  no.  3,  pp. 
185-89. 

64.  F.  E.  Wolfe,  "Admission  to  American  Trade- 
Unions,"  in  Johns  Hopkins  University  Studies  in 
Historical  and  Political  Science,  series  xxx,  no.  3, 
pp.  25-28. 

65.  Haney,  op.  cit.,  p.  164. 

66.  I  have  obtained  valuable  aid  as  to  the  problem  of 
the  organizability  of  labor  from  Mr.  W.  O.  Wey- 
forth,  Jr.,  fellow  in  political  economy  in  the  Johns 
Hopkins  University,  who  is  engaged  upon  a  de- 
tailed study  of  this  important  phase  of  the  labor 
question. 

67.  A.  C.  Pigou,  "The  Principle  of  the  Minimum 
Wage,"  in  The  Nineteenth  Century,  March,  19 13. 

68.  D.  A.  McCabe,  "The  Standard  Rate  in  American 
Trade-Unions,"  in  Johns  Hopkins  University  Stud- 
ies in  Historical  and  Political  Science,  series  xxx, 
no.  2,  pp.  105-06. 

69.  The  Minimum  Wage  Commission  Bill  of  the  Con- 
sumers' League  of  Maryland,  1914,  section  64. 

70.  "The  Minimum  Wage,"  in  Atlantic  Monthly,  Sep- 
tember, 1913. 

71.  Memoranda  of  the  Board  of  Trade  in  Reference  to 
the  Working  of  the  Trade  Boards  Act  (1909),  May 
27,    1913   (London,   1913). 

72.  Special  Report  from  the  Select  Committee  on  the 


NOTES  121 

Trade  Boards  Act  Provisional  Orders  Bill;  together 
with  the  Proceedings  of  the  Committee  and  the  Min- 
utes of  Evidence  (London,  19 13). 

73.  R.  H.  Tawney,  "Inaugural  Lecture  as  Director 
of  the  Ratan  Tata  Foundation,  University  of  Lon- 
don," October  22,  1913,  in  Memoranda  on  Prob- 
lems of  Poverty,  no.  II  (London,  n.d.),  P-  16. 

74.  Stettler  vs.  Industrial  Welfare  Commission  of  the 
State  of  Oregon,  in  the  Supreme  Court  of  the 
State  of  Oregon,  October  Term,  1913:  Appendix 
to  the  briefs  filed  in  behalf  of  respondents,  pre- 
pared by  Louis  D.  Brandeis,  assisted  by  Josephine 
Goldmark. 

75.  /Z)i(Z.,  p.  40.  See  also  Report  of  the  Welfare  Depart- 
ment of  the  National  Civic  Federation,  on  "Work- 
ing Conditions  in  New  York  Stores,"  in  National 
Civic  Federation  Review,  July  15,  1913. 

76.  Dissenting  opinion  of  Mr.  Justice  Holmes  in  Loch- 
ner  vs.  New  York,  198  U.S.  45,  at  76. 

77.  A.  M.  Holcombe,  "The  Legal  Minimum  Wage  in 
the  United  States,"  in  the  American  Economic 
Review,  March,  19 12,  p.  29. 

78.  H.  R.  Seager,  Social  Insurance:  A  Programme  of 
Social  Reform  (New  York,  1910),  p.  84;  also  Ameri- 
can Labor  Legislation  Review,  May,  19 14,  with 
useful  "Select  Bibliography  on  Unemployment," 
pp.  403-20. 

79.  Beveridge,  op.  ciL,  p.  27. 

80.  Report  of  Massachusetts  Bureau  of  Statistics  of 
Labor  (1913),  part  iii,  pp.  31-32;  Thirteenth  Cen- 
sus of  the  United  States,  1910,  vol.  viii,  "Manu- 
factures, 1909  "  (Washington,  1913),  p.  57. 

81.  Bulletin  of  the  Department  of  Labor  of  State  of  New 
York,  no.  54  (March,  1913),  pp.  6-7;  Census  vol- 
ume as  in  preceding  note. 


122  NOTES 

82.  B.  S.  Rowntree  and  B.  Lasker,  Unemployment:  A 
Social  Study  (London,  191 1),  pp.  301-04. 

83.  Ibid.,  p.  310. 

84.  Beveridge,  op.  cit.,  p.  9. 

85.  Ibid.,  pp.  68-69. 

86.  Ibid.,  p.  100. 

87.  Ibid.,  pp.  197-98. 

88.  Rowntree  and  Lasker,  op.  cit.,  pp.  105-10. 

89.  First  Report  of  the  Proceedings  of  the  Board  of  Trade 
under  Part  II  of  the  National  Insurance  Act,  igii, 
with  appendices:  presented  to  both  Houses  of 
Parliament  (London,  19 13). 

90.  Beveridge,  op.  cit.,  p.  268. 

91.  Rubinow,  op.  cit.,  p.  68. 

92.  Bulletin  of  the  United  States  Department  of  Labor 
Statistics,  whole  number  126,  "Workmen's  Coi 
pensation  Laws  of  the  United  States  and  Foreign 
Countries"  (Washington,  19 14). 

93.  Rubinow,  op.  cit.,  pp.  155-202. 

94.  Ibid.,  p.  310;  quoting  L.  W.  Squier,  Old- Age  De- 
pendency in  the  United  States  (New  York,  19 12). 

95.  L.  W.  Squier,  op.  cit.,  part  ill. 

96.  Rubinow,  op.  cit.,  pp.  404-09. 

97.  Jeremiah  Smith,  "Sequel  to  Workmen's  Compen- 
sation Acts,"  in  Harvard  Law  Review,  January  and 
February,  1914. 

98.  Annual  Report  of  the  Surgeon-General  of  the  Public; 
Health  Service  of  the  United  States^  igi2  (\\'ashing- 
ton,  1913),  p.  187. 


p 


